Well in case no one answers you, I would think that it is only limited by the flash drive space you have available, perhaps divided by two (for a temporary file). I don't have much use for the voice memo feature so really haven't played with it. You could try putting in a voice memo that is fairly long (say 10-15 minutes) and if it allows that long then I would assume what I said in the first sentence is probably true.
the guy from the 3gs tour said something about recording class lectures, so I assume they're smart enough to give you at least an hour providing you have the space available on your phone.