What is confusing is what you can install from RAM modules and what the system See's will be 4 GB but the last 1 GB of RAM is not accessible to the OS or the Apps. The older 32bit CPU architecture used fixed memory addressing for video and other services. Which within the Intel Core 2 Duo support logic which just above the 3 GB memory space which locks out the last 1 GB from being used. If you click on the blue link I posted you'll see this - From EveryMac:
Maximum RAM: 4 GB*
*Apple officially supports 3 GB of RAM, but third-parties have been able to upgrade the system to 4 GB of RAM using two 2 GB memory modules with some limitations.
RAM Specs: 667 MHz PC2-5300 DDR2 SDRAM (200-pin SO-DIMM).
Limitations: Rather unusually -- for the "iMac (Late 2006)" models -- Apple notes that:
Although these iMacs will accept up to a 2 GB SO-DIMM in each of the two memory slots, the iMac will only support 3 GB total memory. If you want to maximize the amount of SDRAM in your computer, install a 2 GB SO-DIMM in one slot and a 1 GB SO-DIMM in the other. . .
If you do install a 2 GB SO-DIMM in both the bottom and top memory slots of the computer, the About This Mac window and Apple System Profiler will both show that you have 4 GB of SDRAM installed. However, Activity Monitor and other similar applications will reveal that only 3 GB of SDRAM has been addressed for use by the computer.