in settings and then general i do not have the option of software update...?
That is only present if you have already updated to iOS 5 or later. If you're on iOS 4 you can only update while connected to your computer's iTunes.
How do I know if I am on IOS6
Settings/ General/ About
I also seem to be having trouble trying to use icloud i think this is because my apple id is not in the form of an email address...? can anyone help
You can't access iCloud from your iPhone unless you're on iOS 5 or later. Otherwise, refer to this article: