Free – This one is quite simple. This memory has nothing at all in it. It’s not being used and it contains nothing but 0s.
Available – This numbers includes all physical memory which is immediately available for use by applications. It wholly includes the Free number, but also includes most of the Cached number. Specifically, it includes pages on what is called the “standby list.” These are pages holding cached data which can be discarded, allowing the page to be zeroed and given to an application to use.
Cached – Here things get a little more confusing. This number does not include the Free portion of memory. And yet imight see that it is larger than the Available area of memory. That’s because Cached includes cache pages on both the “standby list” and what is called the “modified list.” Cache pages on the modified list have been altered in memory. No process has specifically asked for this data to be in memory, it is merely there as a consequence of caching. Therefore it can be written to disk at any time (not to the page file, but to its original file location) and reused. However, since this involves I/O, it is not considered to be “Available” memory.
Total – This is the total amount of physical memory available to Windows.
You can go here -> http://brandonlive.com/2010/02/21/measuring-memory-usage-in-windows-7/ to get more information on the memory readings. The guy even goes into giving you formulas to determine how much of the physical memory is actually in use, etc.
For most people, 4 gigs is plenty for Windows 7. What exactly do you use your machine for? If it's just for day-to-day operations (surfing, email, word processing, gaming), do you find the hard drive is thrashing a lot? If so, then you're memory is being used and the OS is having to swap out to the hard drive. If that is the case, then I would look into seeing what services you have running and look for any runaway processes.
However, if your system is not swapping out and the machine seems responsive, then you should be good. I would say a lot of the memory is being held as ready for use or cached. As long as you're not swapping out to the hard drive and the machine is responsive, then you should be fine.
Also, have you tried running memory diagnostics to ensure that your memory is functioning properly?