No, if you're still using a 32-bit system the 4 GB RAM limit isn't entirely accurate... 2 to 3.5 gigs is very common in those machines. If you upgrade to Vista, don't go with the Starter edition, and if you stay with XP there's a switch for the boot.ini that may allow you to give more RAM to apps and less to the kernel - I believe it may be ' /3g ' but you might want to check on that.
Jeff