No, that's not exactly correct. It sees up to 4GB of RAM.
However it has a 4GB address space and that address space has to be shared
with memory used for other devices. So Windows (not just XP but all 32-bit
versions, including 32-bit Vista) can't use that entire 4GB for itself.
How much it can use depends on what devices are installed, but it's normally
a little more than 3GB.