Problem with Java Start Command

I have a VPS server with 3gb of dedicated ram and 6gb of bursting ram. I have set my server up with the latest build of craftbukkit and added various plugins from the site.

I use java -Xms3072M -Xmx3072M -jar craftbukkit-0.0.1-SNAPSHOT.jar to start my server. The problem is that when I enter the server and hit F3 it says the Used memory is (about 200mb) out of 910mb. The Allocated memory is usually 54% of 548mb.

I dont think this command is working the way it should or am i using it wrong? Any help with this issue would be great, thanks.