It will certaily use a good part of it (ie: possibility of longer previews). But keep in mind you still have to keep some memory loose for applications! (there's a "suggested amount of memory" in prefs; you'll see this amount increases with your memory blow-up)
Other than the set-aside memory for preview by Vegas, settable in the options..., i'm not sure how else it would take advantage of the additional memory.
However, it's good to have more any how. I'm currently working with 1.5GB in my box and would not hesitate to add if i could.
More than often, i found myself using other tools during the editing process with Vegas. These are either photo cataloging, editing tools or those for music composition/rendering, etc. Having enough memory to keep all tools' workspace from being paged out to disk makes the editing/creative experience much more enjoyable.
Justin984 wrote: "I want to add 2gb more memory to my system ( i have one already) for dynamic ram preview. Will vegas be able to use all the memory?"
I have 1 GB of RAM. When I monitor memory usage when rendering in Vegas the amount of memory that Vegas takes rises lineraly up to 1.33 GB (yes I know that is greater than 1 GB). I'm not sure what it is using it for except as some kind of a huge buffer but it does take it all. My guess is that it does not improve render speed but I couldn't prove it to you.