It may be that the OS can detect your RAM but not address it. PAE is not, as far as I know, enabled by default.
# free -m
The "total" stat should be around 8000, not 2700.
If it's 2700, you still can't address that RAM.
If you want to enable PAE, you'll have to recompile the kernel
You might find it easier to just back up your home folder and install the 64-bit version of the OS. I use the 64-bit version for everyday Java development purposes and so far have yet to find any serious problems, but I do need the extra RAM.