Did you set the Erosion Control to the On Material Failure setting?  That is where it uses the Ultimate Tensile Strength data to remove an element from the simulation.

Another setting under Analysis Settings is Energy Error threshold (or something like that). I think the default value is 1.  Try a value of 10 or 100.

I looked at the screen shot of your material.  Where did you get those values?  They seem extrodinariarly low. Both the modulus and the strength values.  Did you use the correct units?  Also, your material model is a linear elastic model.  You would be better off with a hyperelastic material model or a viscoplastic material model.

Here is a paper that has properties on a 1 lb/cu ft PU foam.

The compressive modulus is 133 psi (0.92 MPa) which is a lot bigger than 1.5 psi.