The memory display what you are getting is fine. Like zigzag3143 told you can adjust the setting in msconfig and you will get corrected memory display. You can also check the memory display in task manager which gives you the total, cached, available and free memory in your system.
As your system has i7 processor which uses triple channel memory, you would be better off with 3x1GB and 3x2GB memory banks. Make sure all the memory chips are of the same speed, otherwise the faster one will step down to the slower one's speed.
You can also check your memory with CPU-Z (a freeware program), which gives you all the information about the memory chips.