You're limited to 3GB of ram while using a 32-bit operating system. So yes, you can upgrade, and it should make a noticeable difference.
Just make sure you buy the right type of RAM, theres DDR, DDR2, and DDR3. My guess is that you are currently using DDR2. But make sure to double check, take your current stick out, and there should be a sticker on the side which has the type identified. DDR3 wont work in a DDR2 motherboard.
What do you use your system for? If you are just a normal user that surfs, emails, and stuff then 1.5 gb of memory is sufficient. However, you may want to get more memory if you do any medium to heavy gaming.