Physical memory is much more expensive but much more faster than virtual memory.
Physical memory costs around $10 for 1 GB. The same 1 GB in virtual memory costs around $0.10 (ten cents) or less. Physical memory is very fast (as fast as the computer's processor/CPU is designed to run at) -- but virtual memory is much more slow (from 10000 to a million times slower).
So, you want to have more physical memory. Problem is, it costs much more. So you have to find a balance between the two. Most PCs and Macs today have about 1GB to 4GB of physical memory, and the rest in virtual memory. So the physical memory is mainly limited by how much you the buyer wants to pay for it.
The amount of virtual is limited by things like the operating system you have (e.g. Microsoft Windows 7 or Mac OS X), but also by the size of the hard-disk on your computer.
Most modern operating systems let you set aside up to 30% of your hard disk space, for use as virtual memory (this isn't a hard-rule, but they are designed internally for that - but their GUI might limit it to less).
This means when the CPU wants to, it can use the hard disk as a temporary place to keep it's data. The CPU will use this temporary (but slower) memory when its main physical memory (RAM) fills up. It's very complicated when the CPU does this, and what data it moves back-and-forth between physical and virtual memory. But it's controlled mainly by the operating system, and somewhat also by the programs you are running.
In most cases, you should setup your computer to have between 2% to 10% of your hard disk for virtual memory. In numbers, you want at least 3 GB to 15 GB of virtual memory to keep things fast. Any more would be wasteful (your CPU would almost never use it, but your hard disk would be shrunken because of this). And any less would not help keep your computer running fast.
Remember that the more virtual memory you give/setup, the smaller your hard disk will get (temporarily only - you can change this later).
BOTTOM LINE: Set your virtual memory to be somewhere between 6GB and 15GB (at least 3GB if your PC is old).
The actual amount depends on how much free space on (size of) your hard disk, and also how many programs/browsers/tabs you run at the same time. The more programs/browser-tabs you run, the bigger this should be. But if your hard disk is low on space (less than 10GB free), you should make the virtual memory a bit smaller by 1 or 2 GB (or more).
Hope this helps you keep your PC running smoothly & fast.