HT5642: About the security content of iOS 6.1 Software UpdateLearn about About the security content of iOS 6.1 Software Update
You only have the Software Update option in the settings if you are already running iOS 5. If you are trying to update the iOS, you have to use iTunes on a computer to update the iPad.
From iOS 4 or lower - Here are the instructions.
More instructions here - for all iOS versions.
Or you can connect the iPad to the computer, launch iTunes. Select the iPad under the devices heading on the left, click on the Summary tab and then click on Check for Update
If you have iOS 5 + go into the setting and software updates and follow the prompts
If you have anything older, connect your iPad to the syncing computer, open iTunes. Do a sync and backup, them follow the prompts to update the software. (Personally, even if you have a more recent operating system I'd still do the backup first. That way if something goes wrong, you have something to fall back on. I had iOS6.01 when I updated and I still do mine the old fashioned way, hooked up to a computer. )