If you are running the 32-bit version, yes, you are limited to 4GB total. This is not a Windows limit, but a limit of the 32-bit hardware [memory addressing] on which it runs.
To use more than 4GB you will need to have Win7 64-bit running on 64-bit hardware.
This was taken form a post on the overclocking forum
Memory: Ultimate RAM guide - EXTREME Overclocking Forums
Well this is because 32bit operating systems (most common type of os) only have enough memory address space for 4gb. This doesn't mean its all going to your RAM though. This also includes graphics RAM, networking peripherals, pci cards, and the like. You will only be able to see 3.2~3.5gb of RAM on a 32bit operating system. High end computer users might be using a 64bit operating system which natively supports addressing for much larger amounts of RAM. The current maximums for windows operating systems are as follows:
- Windows XP Home: 4GB
- Windows XP Professional: 4GB
- Windows XP 64-bit: 128GB
- Windows Vista Home Basic: 4GB
- Windows Vista Home Basic 64-bit: 8GB
- Windows Vista Home Premium: 4GB
- Windows Vista Home Premium 64-bit: 16GB
- Windows Vista Ultimate: 4GB
- Windows Vista Ultimate 64-bit: 128GB+
- Windows Vista 32-bit: 4GB
- Windows Vista 64-bit: 128GB+