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What is iOS? iOS or iPhone Operating System is the software that runs on your iPad, iPhone, and iPod Touch and makes it work the way it does.
Every so often Apple updates this software and you can then download and apply it to your device if it is supported by it.
To Find out what version of iOS you are currently running, on your device, go to Settings->General->About->Version
There are 2 ways to update iOS:
1. Using a computer that is running iTunes.
2. In the device itself using your Wifi connection. This is commonly known as Over The Air Updates. To be able to perform the update over the air, you need to be running at least iOS version 5. If you are not running at least iOS5 then the Software Update button under Settings will not be there, and you will need to to update by connecting to a computer running iTunes.
The following Article explains step by step what needs to be done in both cases.
iOS: How to update your iPhone, iPad, or iPod touch
If you don't have the Software Update button under settings scroll down to the section titled Update your device using iTunes
*NOTE: If you are not a Developer do not Update to Beta versions of iOS. If you do update to a Beta version and are not a certified developer as established by Apple, you forfeit any support from Apple and these forums.
*NOTE 2: If you are a Developer do not post Bug issues with Beta versions of iOS in the user forums. You need to post in the Private Developer Forums.