It looks like the XPS 720's are typically preloaded with Vista Home Premium. To, expand on Fred's response, chances are you are running into the 3GB limitation of a 32-bit version of Vista Home Premium, or any 32-bit Windows OS.
You will need a 64-bit edition of the OS to fully utilize your new RAM upgrade. Personally, I recommend holding out until Windows 7. Its worth the wait vs an upgrade to a 64-bit version of Vista.