What model iPod do you have? Identify it here:
You may have a 1G iPod and that can only go as far as iOD 3.1.3
A 2G Pod can go to iOS 4.2.1
A 3G and 4G can go to the lastest, which is 4.3.5.
If you have a Mac, you need at least OSX 10.5.8 to get 4.2.1 and later.