It allows you to process larger images. When the VRAM is depleted because of image size, PR falls back to software only mode and not only is that significantly slower, but also the linear colorspace is no longer used, which may lead to visually different fades and the like. If you have the choice and the means, go for the 3 GB version, unless you do not use large images.
Todd has posted links here to a blog about memory requirements for hardware MPE. Do a search.