That is correct - If you went to XP64 or Vista 64, your OS would have access to all 4GB of RAM: I don't remember XP's, but Vista's limit for RAM is 128GB.
Be advised: If you have a Retail licence for Vista, you can get a 64 bit CD from Microsoft for around $10 (handling charges). Doing this requires a clean, full, install. You cannot upgrade from 32 bit to 64 bit. Drivers for some devices can still be a PITA to get, and older software may have troubles. If you have a Creative sound card and they haven't put out new V64 drivers in the last month, you may as well chuck it now. So double check. You shouldn't have any troubles with new software. Definitely do a full backup, and REMEMBER to include any software licence documentation you may have tucked away in your eMail client. Vista 64 should detect the existing installation and put your current files into a folder named WINDOWS_OLD. And nearly all the time, it will. But it pays to be sure.
I've been running Vista 64 trouble free for the last 5 months. Nothing's brought it down yet. Configured my home network all by itself. It's been stable, and has run everything I've put on it without any complaints.
It's not hassle-free, though: It has a pathological hatred for anything with expired or unsigned digital certificates - So if you like playing with shareware from the Web, your hobby will be *severely* limited. You used to be able to shut that off, but no more. So the only way I know of to get around it is to grab a hold of the software necessary to digitally sign the stuff yourself. ....Yeahhhhh....