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I have a SQL Server 2008 in production environment (Windows 2003 -64 bit) and
it is consuming 10 GB memory of installed 20GB. Is this normal behavior or is there anything wrong with the configuration ?
P.S. I have hosted one web application which is used by hundreds of users concurrently everyday .
SQL Server reserves memory which is why you are seeing high peaks. It might show up as using 10GB in your Task Manager, but the real memory usage can be checked from within the Management Studio.
Also, you can establish upper and lower limits to the amount of memory (buffer pool) used by the SQL Server database engine with the min server memory and max server memory configuration options.
Check this article out http://support.microsoft.com/kb/321363