Memory hog + Stack overflow

mem.hs

module Main where

import System.IO
import qualified Data.Map as M

main = do
	inh <- openFile "text.txt" ReadMode
	outh <- openFile "dict.txt" WriteMode
	counts <- mainLoop inh M.empty
	let excsPairs = M.assocs counts
	let excsStr = concat $ map (\(w, count) -> w ++ " :: " ++ (show count) ++ "\n") excsPairs
	hPutStr outh excsStr
	hClose inh
	hClose outh

mainLoop :: Handle -> M.Map String Int -> IO (M.Map String Int)
mainLoop inh counts = do
	inEof <- hIsEOF inh
	if inEof
		then return counts
		else do
			ws <- (hGetLine inh >>= \inStr -> return $ words inStr)
			mainLoop inh $ updateMapForWords ws counts

updateMapForWords :: [String] -> M.Map String Int -> M.Map String Int
updateMapForWords ws counts = 
	foldl (\m w -> M.alter updateCount w m) counts ws
	where 
 		updateCount (Just c) = Just $ c + 1
		updateCount Nothing = Just 1 

The fork I just made https://gist.github.com/3151613 is how I would have written this if I were just writing from scratch; it may be you were taking a more complex approach because you were simplifying a more complex case.