Here is the facts:
With a 512 mb video card in your system you will probably get about 3 to 3.2 gig of usable ram if you install 4 gigs.
If you install 2 gig of RAM you will get to use all of it.
Three is better than two and RAM is cheap so go ahead and install 2, 2 gig sticks of RAM.
Why will your Video RAM affect how much system RAM you can use? All current 32 bit MS consumer level operating systems have a 4 gig limit. That's how much RAM the OS can address due to it's own internal limitations. However, some of that 4 gig of addressing capability must be reserved for other devices (other than your system RAM) which also have RAM on them- RAM which also needs to be addressed by the OS, so the OS reserves a chunk of it's address space off the top for those devices. Naturally the Video card is by far the most RAM heavy of these other devices so if you have a lot of Video RAM the amount the OS reserves will be high.
Your extra RAM will just sit there unused NOT because the RAM itself is being used by these other devices but because the addresses that could be assigned to that extra RAM are reserved.
If you get Vista 64 this is not an issue. Vista 64 is very popular with gamers and enthusiasts for this reason and support for it is nearing 100%. It is quickly becoming mainstream and I would highly recommend you look into it.