u can put as much Ram as u want, just that as the guy above me said, applications may not recognize more than 3gb of RAM. so you are wasting the extra ram.
For 2GB of ram its fine already. Im using Vista 32bit and 2GB of ram (considering vista requires much more RAM while idle than XP) and it runs fine. 2GB of RAM is fine unless u want to open lots of big files at the same time in photoshop, which might start to lag.
I think if u want your computer to process photos faster in photoshop u should upgrade your CPU (which i think its fine also). Unless you really cannot stand the slowness of the computer while in CS3, i suggest you stick to your current setup and save the money.
Speed of Processing pictures in photoshop is mainly dependant on CPU speed. RAM helps by feeding info very quickly to the cpu to process pictures.
So if your RAM is small, your computer has to ask your hard drive to provide the information for the CPU to process, which is slower.
To summarise, CPU power is like how fast a person can do math (like using the formula to get something useful), RAM is like knowing all the formulas on your finger tips, and flipping the Textbook for formulas to help solve the problem is like searching the harddrive, which is slower than knowing formulas on your finger tips.
Thus, RAM helps to a certian extent, but if u want the biggest improvement in speed, Concentrate on upgrading the CPU.
hope my explanation is not too confusing.. haha