2GB on an XP system is great; 2GB on Vista is about the minimum for any sort of performance as it is a bit of a hog; 2GB on win7 should see better performance compared to Vista, but is still going to benefit from another 1-2GB even in 32bit versions.
It is the 4GB barrier in 32bit oses as it can't give addresses for the memory locations. With 4GB installed, the OS squirrels away a chunk of that and effectively you end up with about 3GB, but if you started with 3GB you would obviously end up with less than that available.