Ok. Are you on transitional fees? If I were you I would automatically fail it and then have to do another module to make up points. However if you get financial support I'd be careful and check first as you may not be covered for the extra course. Likewise if you pay via OUSBA they may not fund you. The maximum number of years you can get financial support for is 6.
Is the module mandatory for degree? On my OU degree all the level 2 modules are mandatory but you choose from a list for the level 3s. If you scrape a pass they will hold you to that - now any resit is capped at a 4 as you say. If you fail and don't want to do the resit then you can choose another level 3 but that may lengthen the time it takes for you to finish the degree
FWIW I have thought twice I failed a module - I passed both times - they really try and get you through the exam
by the way the only other thing to check is that if your degree has a completion date ie Dec 2015 or something then you need to check that you will have time to complete another module within this timeframe