OutOfMemoryError: PermGen space is usually only a problem if your using the hot redeploy feature of Tomcat. It can also occur if you simply have a very large number of classes being used in your deployment.
Increasing the amount of PermGen available in the VM will solve the large number of classes problem. That can be done by adding -XX:MaxPermSize=128m or -XX:MaxPermSize=256m to the environment variable JAVA_OPTS or CATALINA_OPTS (this can usually be done in Tomcat launch script). If you are launching Tomcat directly you can export these environment variables in your shell.
Unfortunately this doesn't completely solve the redeploy issue it only make it so you can redeploy more times before running out of PermGen. To fix this issue you'll need to make sure your web app unloads correctly and completely. This involves making sure all threads started by your webapp stop, and JDBC drivers loaded are unregistered properly among other things. The other way to solve this is to not use hot redeploy and restart Tomcat when making changes to the application.