I too find Wavepad is incapable of handling large files. These are the effects I've found:
* Stuffs up on very big files. For eg, a 78Mbyte WAV file - no way does it work.
This is unacceptable, since these files are created by an audio device (a pocket
recorder) who's output I _must_ be able to edit. This is what I bought wavepad to do. Potentially, this device can make files up to 512Mb long.
Its really not practical to assume that the whole of an audio file will fit into system memory - at some point, Wavepad must have to fall back to disk caching. Does Wavepad manage this itself, or leave it up to Windows to deal with? But Windows can't be guaranteed to keep the play queue in RAM filled, can it?
* On very big files, Wavepad also sometimes causes the OS to pop up a 'Drive C
is full' window, when it a) it definately isn't, and 
Windows is supposed to
be using a swap file on drive D: (on my machine), so whats it doing with C: ?
If it uses a temp file somewhere, how do I tell WavePad where (drive:path) to
put that file?
* Sometimes, the colour table for the waveform displays are screwed up, after
opening and closing several files. Background, waveform, cursor line and selection
can be any of the usual possible colours - even the same ones!
* There seems to be some memory allocation leak, since opening and closing
bigish files several times often causes wavepad to eventually go nuts.
Effects like screwed up button images, waveform colours, etc.