The Story
I think we are supposed to believe that Lenny created the story of Sammy so that he could have purpose in life. This is how I read the story--chronologically (and with help from "Memento Mori"--the short story that inspired the movie):
Lenny's wife is attacked, but he kills the attacker (only one). His wife lives, but the truama, for whatever reason (probably coupled with the blow to the head) is too much for him to take and so he developes a type of dissociative condition (mental illness, rather than physical) that prevents him from making new memories. Everything he said that happened to Sammy, I believe actually happened to him (Lenny/Sammy -- very similar names. But the biggest give away of this is at 1:29:55 where it shows Sammy sitting in the hospital, but as the doctor walks in front of him it shows that it is really Lenny--play it at 1/8 speed and you'll easily see it).
So, Lenny is physically capable of making new memories, but not mentally capable (so to speak). Lenny's wife can't take this, and she does the insulin shot thing to him. Lenny can't really forget all this (as he doesn't have the physical illness--as shown by the lack of conditioning) and so he invents the Sammy story so that he can live with himself. He stays in the hopsital for a while until the notes to himself finally convince him to go looking for her killer.
Again, inventing a reality for himself so that he has a reason to live (we never do this ourselves, of course
). He finds his first victim and kills him. But, as he is taken away in the back of the police car he can't find a pen to write down waht he did. Likely, this is Teddy who is taking him away (and depriving him of a pen). Teddy then uses him to kill multiple people.
Finally, however, Teddy gets too careless and Lenny figures out what's going on. This pisses Lenny off and he creates himself another reality which ends up in Teddy getting killed. It would be interesting to see what Lenny now invents for himself to do since he's gotten "revenge".
This story, and especially the way it is told, is the strength of this movie. The first time I watched it I was blown away. The second time I watched it, it was a blast to put it all together. Unfortunately, this last time I watched it (last night) it definately was lacking in its original impact. I put the last few pieces together, but it wasn't nearly as exciting as the first two times. But, I don't think that detracts from two incredible viewings (most movies aren't good for even one).
I agree Nolan did a great job putting this movie together. The flip side of that, however, is that he's just copying himself.
Following is told in exactly the same way. The budget is obviously smaller, so it has lower production values, but the story telling technique is precisely the same--so, he does lose some points for simply redoing what he already did. But, still easily comes out on top because it is so cool.
Memento as Film Noir
I believe Nolan felt that he was making a film noir when he made Memento (didn't he say this somewhere?), but I don't think he really got too many noir elements in there. falling snow, obviously, will disagree with this, and he/she did point out some noir elements that were used. But, for me, one of the main things that noir has to have is lots of shadowing and other symbollic uses of entrapment. I think Memento fails here.
Compare the nearly always well lit Memento, with the nearly never well lit
Se7en (using for comparison, since I just watched it last week). Additionally, Se7en did a great job of showing depravity and searching for meaning (other basic noir elements) where as Memento struggled in these areas. Sure, Lenny is looking for meaning in his life without a memory, but he isn't looking too hard. Basically, he's satsified with his fooled-self approach to life. Even the final scene where he closes his eyes while driving just reinforces his ability to write off his angst.
This is another key to film noir--an unhappy ending. While it coudl be argued that the ending isn't happy--in many ways it is. Lenny will have the revenge he wants--while not against his wife's killer, it is against his own manipulator. And, he agrees with himself that life is worth living without a memory--it is still there after he opens his eyes.
Again, compare this to Se7en [SPOILERS FOR THIS MOVIE IN THIS PARAGRAPH] (which really has almost too happy an ending for film noir) where 2/3 of the good characters die and the bad guy gets exactly what he wants. The only redeeming thing about the ending of Se7en is that Sommerset sees the world as worth fighting for.
One final comparison with Se7en (which, you can tell, I do see as being very film noir) is the great job it did with bars to show the characters as trapped (see the Se7en thread for my discussion of this)--classic noir technique. I don't remember this, or any other trapped symbolism, ever being done in Memento.
In summary--Memento is a fun movie with a great story telling device that creates a unique experience (if you haven't already seen Following), but it is a fairly weak entry into the film noir genre. But, I still had a great time!