What??????

It's a simple fact, the 32-bit OS can only have a 4 GB address space. Take off some of that for memory mapped devices and you're left with 3 - 3.5 GB usable RAM. A 64-bit OS fixes that. Any 32-bit application running in that OS will benefit from the additional RAM. A 32-bit process still can't use over 4GB of RAM as it's address space is limited, but the OS most definitely can map the RAM it uses to anywhere within the computer's RAM. So 2 32-bit applications on a 64-bit OS can be each using 3 GB of RAM without any swapping needing to happen.

Yes, there are applications that have trouble running on anything past XP. You could say poor coding on both the OS and the application side cause them to be quite dependent on each other. It sucks, but most applications are past that by now. If compatibility and just working is your chief concern, you stick with what works.

Should be noted we're talking the consumer MS OS's here, ie, XP & Windows 7. There are exceptions to the above for other OS's, ie, PAE to allow more than 4 GB of RAM for a 32-bit OS, but that doesn't apply to XP.