Check with the manufacturer of your motherboard, as they will have set a limit on how much the board is capable of using. There is also a limit set by some operating systems - Windows XP for example can only see 3GB of RAM no matter how much you have installed. I would recommend using an online system scan (available at www.crucial.com for example) that checks your motherboard and lists what options you have. Once you have this info you can shop around for best value.
Externnsion of ram is limited by the manufacturer , first check out the manufacturer limit of ram if they allow you to increase the ram as such extent then you can otherwise it is useless to insert the ram in ram slots.
As all before said. Easiest, add two more 1GB simms to the remaining slots. That will max out the system if you are running a 32-bit OS. If your CPU and hardware can handle 64-bit systems, and you install one, then you might be able to install 4x2GB or bigger simms. Again, as said, check with the vendor. My system will handle 8x4GB simms, but I only have 4x2GB ones installed since more cause serious overheating. I may upgrade to 4x4GB to double my available memory, but so far 8GB total ram works well for my 64-bit operating system. I am normally only using 1-3GB of RAM. When it goes over that, it is usually because some bit of software has decided to break down and suck up all the system memory... :-)