Because the standard 32bit home desktop versions of Windows are not licensed to allow more than 4Gb. The only reason you are limited is because Microsoft wrote the OS to limit you not because 32bit cannot address memory above 4Gb.

If you want to read more about this in full detail with some images where the guy actually removed the limitation by altering the license file you can do so here:

"..That 32-bit editions of Windows starting with Windows Vista are limited to 4GB is not because of any technical constraint on 32-bit operating systems. The 32-bit editions of Windows Vista and Windows 7 all contain code for using physical memory above 4GB. Microsoft just doesn’t license you to use that code."

I'll help answer the simple one first.

What OS are you using? Should be 32-bit Windows OS that's why shows only 3.5gb of RAM usable. If you want to make full use of your 8gb, install a 64-bit Windows OS.

For your reference:

http://www.zdnet.com/blog/hardware/clearin...-confusion/3124
http://www.tech-forums.net/forums/f78/32-b...itation-181680/

THEN, of course we can go deeper here;

http://www.sevenforums.com/hardware-device...-explained.html
http://www.geoffchappell.com/notes/windows...ense/memory.htm

The focus on the line:

erm...if i change to 64 bit system will it effect the software and game i bought ?

I dont think it affect any 32bit software and games
unless 64bit software and games install in 32bit system. then it cannot been use