In 32-bit I know there is a limit to the amount of memory (3.25 or 3.5 gb?) that can be addressed but lately I'm a bit confused.

I've read this also affects the System Ram + Graphics memory. I have 2GB system Ram and 1GB no prob if thats true.

BUT, What About CPU cache, Virtual Memory..or anything else. At this point I could probably just leave VM off but i'm just curious.