Thank you for your response and time.
I have tried your suggestions but ended up in same error message. I strongly believe, error may be due to compilation problem not memory issue. Top command tells, CPU: 12% and Mem: 45%. FastQC reports, total sequences: 463023, and sequence length: 30-301. I believe, I can run this stuff in my desktop with 4GB RAM.
I hope you've read through all the segfault posts here. Word of caution: velvet is a memory hog, you better have a high config machine.