Well, it seems 1&1 has a hard limit set to 32MB and no matter what you set it to they will not let you account go above that regardless of what is reported.
It seems this is not uncommon with 1&1 and “older” accounts. Doing some searching reveals many posts just like this one.
Unfortunately the general consensus seems to be to switch hosts.
What sad is… according to the limits explained in the 1&1 control panel your limit should be 120M. You definitely are not being granted that amount which is why you are getting this memory errors. As you use more plugins or as WordPress and plugins are updated it is likely that’ll you’ll run into this more and more often.
Sorry that I am unable to find a solution for you!