What format are the songs on your computer? (Check your settings in the Import section of the iTunes Preferences)
The 1000 songs is an estimate based on an average 4-minute song encoded as either a 128k MP3 or 128k AAC = 4MB x 1000 = 4GB.
If your songs are absurdly long or encoded as, say, AIFF (where 1 minute = approx. 10MB), you won't get as many songs on there. If they're really short or encoded as, say, 64k MP3 or AAC (where 1 minute = .5MB), you'll fit a lot more.