Vista's memory management is very good. It uses RAM, yes. What good is all that RAM if you don't use it? When a program needs it, it allocates resources far better than XP.
I don't know if the OP is a Mac user or not, but if you have a PC, Vista and CS3 play very well together for me. I do like freeing up CPU and HDD cycles for CS3 to use by using speedbost.
Ideally you need to determine what you are goingt o be doing with photoshop and allocate how much RAM it needs as well. My images are 5000 pixels wide and larger. If you are processing 20D files then you can get away with 1gb of RAM without too much fuss.
Remember, you only have enough engine power if you can lay 2 (or 4) thick black strips exiting the corner, all the way down the straight until you have to brake. Then you need more traction! Same goes for computers.