You can update through iTunes. Once you have the latest iOS you can update directly from your iPod.
As far as th freezing up, try a reset.
First, double tap the Home button and quit all running apps (touch the red dot)
When that are all closed:
Hold Sleep\Wake and Home buttons until screen goes black and Apple logo appears.
The Settings>General>Software Update comes with iOS 5 and later.
Connect the iPod to your computer and update via iTunes as far as your iPod model allows
A 4G to 6 Requires iTunes version 10.7 or later. For a Mac, that requires a Mac with OSX 10.6.8 or later