I noticed this too.
I downloaded and installed Quick System Info, but that shows total RAM as being 729MB !!!!!!!!!!!!
I spoke to Asus support about this, who didn't really have a clue! The girl there confirmed that their 1GB test model also showed the same RAM under settings (531ish), but didn't have quick system info.
She reckoned that the OS would be using the rest, although I didn't believe this. Surely system info would still report the RAM that the OS has reserved, but just show it as unavailable? Also, 295MB sounds like a lot for the OS to steal. They'd have no chance of installing Honeycomb on phones, that often only have 256 - 512Mb total RAM to start with!
She then tried to blame it on the different calculations that they use to calculate Gigabytes. This is usually down to taking 1mb to be 1000 kb, rather than 1024kb. To lose 295Mb out of 1024 would have to be one seriously optimistic calculation!
Anyway, if anybody can come up with a proper answer to this, I would like to know where the RAM has gone.
Does anybody have a Xoom to compare to? Surely that should show the same.