Upgrading from Windows 7 32 bit to 64 bit

I recently purchased a computer for my parents from a local store just a block away from my parent’s home. My computer was installed with a 4 gigabyte RAM memory. But when I checked via the computer properties only 3gig of RAM is recognized. I initially asked the store why that happens. He told me that I need to upgrade to 64 bit version to utilize the whole 4 gig of RAM.
Is there any truth in this? Should I upgrade the OS, what are the costs of this upgrade?
