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Flash has had a memory leak problem with streaming audio since 2004. There's an open ticket on the Adobe (Macromedia at the time) developer database since 2005. Adobe isn't inclined to fix the problem, and even if they did, it still wouldn't solve the problem since it would require EVERYONE to update their flash player.
For you, I see three very simple solutions. Turn off logging, disable YP, or use Icecast. In fact, if you're going to start banning people for using the shoutcast player, I don't see why options 2 and 3 aren't completely viable solutions for you.
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