Free isn't necessarily all of the "free" memory you have left. Inactive counts towards that too, and active apps can be terminated as needed. iOS works in a "be as greedy as you want" philosophy in regards to memory.
Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A334 Safari/7534.48.3)