I would really recommend you to upgrade your ram to 3Gb or so. You could also install XP.
XP Doesn't register 3 gigz of ram
Operating systems based on Microsoft® Windows NT® technologies have always provided applications with a flat 32-bit virtual address space that describes 4 gigabytes (GB) of virtual memory. The address space is usually split so that 2 GB of address space is directly accessible to the application and the other 2 GB is only accessible to the Windows executive software.
According to this, if your RAM exceeds 2GB, the excess amount will be used only by Windows kernel and therefore the report from Control Panel is quite correct in that it is reporting only the usable RAM for applications.
Before an upgrade of ram I would check to ensure the motherboards specifications... If your motherboard only allows 2 gigs for example, anymore would in fact slow down the computer
There you are wrong; I had a vista computer that has 3Gb which I degrade to XP and XP saw that I had 3Gb.
sq09 try to see if 2 or 3Gb helps; Windows 7 by default uses abit less than 1Gb.
Regards,
Tenko