I tried a 4G memory module, single rank which has identical pinouts (signals) as the 2G module except for chip select and clock enable (but with the same pin assignments) and it would not work. I then hardwired the chip select and clock enable lines in various configurations to guarantee activation at least half of the memory present (2 GB, like that of the 2 GB module) and that failed as well.
The ram modules have a PROM onboard that store characteristics of the memory module, like speed, latency, burst mode, etc (device parameters). Also, the absence of one additional A/D line (of the 204 pins present), say removed from the trace bus on the motherboard, is all that separates a 2 GB module from a 4 GB module, address/data buswise. Its possible to remove the trace line but that's not realistic or practical as a hardware limitation, although technically feasible.
Getting back to the PROM, the N570 CPU with its memory controller interrogates the memory module to find out what type it is and how it should configure itself to work with it. There are common (shared) bus & I/O lines used during power up that allow the CPU to do this, even though the CPU doesn't know yet which type it is working with.
If the BIOS determines that the memory at boot up is 4 GB (or greater) it may refuse to work with it, as a self imposed limitation of the BIOS design. That's why, for example, no one has got past boot up using any of the available 4 GB memory modules. This is where I believe the problem lies, not with the hardware or memory. Fix the BIOS and you should be able to handle 4 GB RAM on your netbook. Anyway that's my conclusion.
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There is no difference in performance between the versions (unless you count the Aero theme, but you can disable that). Ultimate just has more features, so it wouldn't make sense not to get it if cost isn't an issue for you.