Just reading some notes in a purdue lecture about OSs, and it says:
A program sees memory as an array of bytes that goes from address 0 to 2^32-1 (0
As previously stated by other users, 32-bit Windows OSes use 32-bit words to store memory addresses.
Actually, most 32-bit chips these days use 36-bit addressing, using Intel's Physical Address Extension (PAE) model. Some operating systems support this directly (Linux, for example).
As Raymond Chen points out, in Windows a 32-bit application can allocate more than 4GB of memory, and you don't need 64-bit Windows to do it. Or even PAE.
For that matter, 64-bit chips don't support the entire 64-bit memory space. I believe they are currently limited to 42-bit space... the 36-bit space that PAE uses, plus the top 8-bit addresses,