You would need to upgrade to 64-bit Vista to see the full 4 GB.
The reason is that 32-bit Vista (what you probably have now) can only address 4GB of memory address space, but some devices in your computer (such as your video card) take some of that address space. So Vista is only able to use 3.2GB of the RAM.
It's not worth buying a new version of Vista just for that last 800MB of RAM though, especially with how cheap DDR2 RAM is these days. It doesn't hurt to waste a little, and the lost RAM won't really affect the computer's speed any noticeable amount.