x86 architectures have a limited address space, just 4 GB in total, and they have to fit all hardware components, leaving at maximum just 3.5 GB, but more in the vicinity of 3.3 GB for RAM. As you can see in the screenshot accompanying this article, my 32-bit windows 7 build 7100 Ultimate is only able to address and use 3.37 GB of RAM out of the total 3.5 GB installed. This limitation is valid for all editions of Windows 7 32-bit.
But this is not the case for the 64-bit flavor of Windows 7. The Home Basic and Starter SKUs can manage up to 8 GB of RAM, with Home Premium taking the limit to 16 GB. The Professional, Enterprise and Ultimate versions of Windows 7 will support as much as 192 GB of RAM.
Source: Softpedia