A 32 bit OS won't let you use more than 4 GB RAM (including those reserved for the OS). The Radeon drivers for Linux (if you use the proprietary drivers, that is) are quite good, but you might want to check out Mint or Debian instead of Ubuntu. If you use Ubuntu for what you'd typically use a Windows computer for (gaming, 3D modelling, art, Silverlight movies, and so on), it's neither fast, nor particularly stable.
A lot of games these days run well in WINE (id Software's engines are even optimized for it), so don't be shy about the GPU. WINE is rather seamless compared to "emulators".
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“He who controls the spice controls the universe.”