As others have said, there is no real drawback in using the 64-bit version, so you might as well install that. 16-bit programs are typically either Installshield installers, which can be run through XP mode, or some of the earliest Windows games, which work in Windows 3.1 through Dosbox.
Games won't really benefit from 64-bit at all. The most memory I've seen a game use was 1.5GB (Crysis Warhead), and the console ports we get these days use much less. A few games out there have 64-bit exes, but I don't know of any that actually get a performance boost from them. It's more useful for graphics or video editing programs that need large amounts of memory, or computational software that does a lot of DP calculations. Most of these programs come with native 64-bit versions.
it supports 4 gb TOTAL addressable memory, which usually ends up around 3 gb for ram after taking out video card and other bits of memory scattered about a computer.
You get 3.2GB in most cases, with any single process limited to 2GB. Although this is more than enough for games.