I'm running Win7 Ultimate 32 bit and I believe it's using too much memory. When the system is idle and not even running Steam or Firefox, memory usage is 1.00 GB out of my 2.00 available. I run FRAPS and DisplayFusion (I have two monitors) in the background but they amount to roughly 20MB.
I have also disabled most non-essential services as well as unnecessary boot programs. Usually I have ~45 processes running, 15 of which are user processes.
I have already made efforts to streamline my OS, and the total memory usage of all my user processes amounts to just under 400 MB (with Firefox and Steam running). That's nice, and it's about what XP idled on.
What the hell does Win7 do with 500-600 MB of phantom memory?
Windows uses memory dynamically and will make use some of your free memory if it's not otherwise required. I've installed Windows on systems of various sizes, and the amount of memory it uses varies - on a 768MB system it takes around 400-500MB, while on a 12GB system it takes around 1.5 - 2GB. This is a good thing, it means you're getting value for the memory you purchased. It's a bit of a waste to pay money for memory that just sits empty all the time.
If you load up the system with application programs that actively require memory, Windows will automatically release what it doesn't need to optimize performance.