I added -balloon virtio to the args: option, and its working fine... Could this be added by default by proxmox? Earlier versions of KVM had it enabled by default but it seems 0.12.x now needs this option.
Also, balloon only lets you decrease the available memory in a guest... Would it be possible to have 2 memory options on each image, a boot memory (ie what available when the system first boots) and a max memory so you can increase the available memory on an image if required?
Sorry I have disappeared after creating the thread, but I tested out meto's args addition to the config files and it worked great. Just like someone pointed out I can not add memory only remove it. Will this be added as default in the future along with the possibility for a maximum memory option just like bert64 pointed out?