IainB: hold back your conspiracy theory horses, there!
There's pretty sound technical reasons for going to 4096-byte sectors, but that's covered elsewhere. Western-Digital has actually gone to lengths to make legacy OSes support these drives at all - exposing 512-byte sectors and doing internal handling (which is a fault imho, they should've exposed 4k sectors and dropped legacy support), and even adding a "offset-by-1" jumper so people who can't figure out how to manually create partitions (which solves the performance problem 100%) don't get the performance problems.
As for the 4GB limit in 32bit XP, keep in mind that 4GB is the logical memory limit for a 32bit OS. Yes, since the PPro we've been able to address more than 4GB in 32bit mode, but it's done through "memory windows" - which is mostly useful for running a crapload of apps at once, or pretty specialized big applications. Basically server stuff... so while the limit might suck, it's fair enough they don't want a client OS potentially eating server OS marketshare.
What really sucks about the 4GB limit is that it's on physical memory addresses rather than "available memory", which has given all those "I have 4GB but can only use 3.25GB" problems... and that's something you can thank fscktarded 3rd-party driver developers for. XP RTM supported 4GB-total, but because of people thinking "oh, we're on 32bit, we only have to handle PHYSICALADDRESS.LOWPART", users experienced BSODs. And following tradition, Microsoft bent over for sucky 3rd-party developers instead of saying "go fix your crap if you want it to run on Windows".