Sketch size ATmega168

Hi all,
i am beginner with arduino, but i have some little project completed. I am finishing next project now and found some issue:
I developed my aplication on Teensy++ 2.0 board, everything works very well. I decided to use ATmega168 standalone for this application(due to price). I bought ATmega168 and burn bootloader to it by Teensy as ISP. I choosed Arduino Mini w/ ATmega 168 board type in Arduino. When i uploaded sketch (size 12624 bytes of 14336 maximum) everything seems OK, but after upload ATmega not working as i expected. (My sketch is RS485(SoftwareSerial) LCD driver with Serial configuration). Atmega not responding for any Serial Monitor command. When i remove some setup instruction (clear LCD, print some start text etc.) and downsize sketch to approx. 11000bytes everything works as I expected.
What I am doing wrong? Had I bad bootloader, which is bigger than arduino expected? Arduino SW was downloaded from this website.
I tried two ATmega168 with many Board types (Diecimila, Nano, BT, NG) and it has same result.

I hope that it is understandable with my English.
Could somebody help me with this? I am little confused :~
Thank you
Regards
Jan

Perhaps you are running out of SRAM memory using the 168 chip which has only 512 bytes of SRAM to hold all your variables, arrays, String constants, stack space, etc. The compiled memory size just shows how much FLASH memory the sketch uses not it's SRAM requirements. A teensy2++ has 8192 bytes of SRAM.

Lefty

Yes, thank you for this answer!! I checked start size of sram and it was out of memory... I tried to find something about it and found thread about SRAM size check at compile time: http://arduino.cc/forum/index.php/topic,46451.0.html

I am very surprised that it wasnt implemented from 2008 to Arduino software and still waiting on todo list...

Thank you again to help me!

the 168 chip which has only 512 bytes of SRAM

sp. "1024"