You can reduce it by movign to a x64 OS.
@surfasb Is there any solution for 32 bit OS ? 64 bit windows has some
compatibility issue with old games and softwares. Also 64 bit OS feels
slower on my notebook.
Technically, there is no solution that I know of. The graphics card has to be able to address its memory one way or another. So everything has to fit in that 32 bits of address space. Which is the issue you are running into.
Perhaps the better question is "What games are having issues?" and "where does it feel slow?"
I only wanted to use all ram because sometimes I rum multiple virtual machines which might benefit from more ram. Is it worthwhile upgrading to 64 bit ? I once installed Win 7 64 bit on notebook with 2 gig of RAM and it felt sluggish. Also the booting time was increased.
Technically, 64 bit is slower (larger pointers, data structures, etc).
But your bottleneck is your harddrive, since the OS is going to be spending most of its time swapping programs in and out of memory. VMs tend to do that.
The cheapest solution for your case is to get a good performing 8GB flash drive, like the Corsair Voyager. Plug it in and use it for ReadyBoost. This is the solution I use on my laptop. It's not going to make it as fast as, say a 8GB desktop, but you gotta compromise somewhere.
I'd also look at your workload. Look at how many VMs you need to run. Most people need at most two VMs going. And that's usually to test out some kind of client-server scenario. For example, when I was studying for my MCSE, I ran 2 Windows Server 2003 VMs. But you can get away with 512 or even 384 on server 2003. I'd look at my workload and look at how much memory the OS is using inside the VM.