Win Xp shows less RAM than installed

Hi,
Recently I installed 4gb RAM in my PC. But when I goto to Control Panel>>>Syetem>>General it just shows 3.25 GB.

My Specs are:
OS: Win XP Pro Sp2
Pentium 3.4 Ghz (Dual Core)
RAM: 4gb
PCI Express Card: NVIDIA GeForce 7300 GT (256MB)

A few questions that I have are:
1) Why is this happening ? Is there a sharing process going on?
2) Will it affect Video Editing and Playing Games

Thanking you in advance.