In Windows 7 32-bit it will only use up to 3.25 GB of RAM, that's the limit set by the Windows 7 programmers in 32-bit version.
As far as the 32-bit editions of Windows 7 are concerned, the limit continues to be 4 GB of RAM. However, even if Windows 7 correctly reports all 4 GB of RAM installed on a machine, the 32-bit versions of the platform will not be able to address all of it.
If you have an onboard video chipset on the motherboard it will use up RAM also, whereas if it was a separate video card the RAM would not be used at all since all video cards have their own RAM. Since your usable RAM is about a 1/2 GB shy of the 3.25GB usable then the video is using about 512MB for it's own use.