I would switch to the 64-bit Win7, if there isn't additional cost involved (or just a little). You are running 4GB of RAM, which to utilize it all, you need a 64-bit system. If you don't want to do that, drop you RAM down to 3GB and save a little money.
IMO... All new builds should be based off of a 64-bit OS.
edit: MadAdmiral beat me to the punch