Well, think about what you're doing with it--running two large-scale, multitasking OSes
at the same time,
plus Photoshop--one of the most notoriously RAM-hungry programs there is--and a few odds and ends.
If you ask most people, the'll tell you that Windows 7 alone doesn't really perform right with less than 3-4GB (that's been my experience at work, anyway). And Lion also likes about 4GB. And Photoshop alone, OS and other apps aside, is going to be angry at you with less than 1GB for itself, and really, once you get into moderate sized images and a few layers of history, it's going to want at
least 2GB, preferably 4GB or more. Word is no longer the hog it used to be, but glancing at it right now it wants at least 300MB, and Chrome is pretty aggressive about caching and prefetching as well.
Put all that together, and you should be happy it runs at all on 4GB total available. Sounds like a lot (and compared to what iOS can do with even 256MB it IS a lot), but keep in mind that 4GB of good RAM costs less than $40.
No. RAM is one of the few things that Apple considers user-upgradable. It takes all of a minute and a half with a small screwdriver, and even someone not used to computer upgrades shouldn't find it too difficult.
You will find plenty of recommendations here, but I'd personally tell you to go with
OWC--reasonably priced, lifetime warranty, guaranteed to work in your Mac, and they have thorough installation instructions.
Personally, I'm waiting impatiently for 8GB sticks to get down to the point where a regular human can afford them.