Run -> msconfig -> BOOT.INI tab -> Advanced Options...
What you're doing is telling Windows how much memory it's allowed to use for Windows processes. Windows won't reserve the memory; it just won't use over that amount. For that reason, lowering the maxmem isn't always a good idea.
2GB is fine for most, especially if you're using over 3GB. I usually lower mine to 1GB on install. If (for some weird reason....) your Windows needs more than 1GB, try 1.5 or 2GB. Remember, though, other apps can use the memory until Windows needs it and takes priority. Even if you use memory-intensive apps, you don't need to lower it.