WiFi sync will only work with IOS 5 installed.
This from iTunes Help
Sync your device over a Wi-Fi network
If you’re on a Wi-Fi network, and have iOS 5 installed on your iPod touch, iPhone, or iPad, you can sync your device without connecting it to your computer.
You can sync your device automatically or manually over Wi-Fi. You choose your settings for Wi-Fi syncing the same way you do for syncing over a cable.
To turn on Wi-Fi syncing, your device needs to be connected to your computer. Once Wi-Fi syncing is turned on, you can sync your device whenever it’s on the same Wi-Fi network as your computer.
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To turn on Wi-Fi syncing:
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To sync your device over Wi-Fi:
When your device is syncing over Wi-Fi, the Sync icon appears in the device’s status bar. You can use your device while it’s syncing over Wi-Fi.
To update or restore your device’s software, your device needs to be connected to your computer.
You can sync a device wirelessly with multiple computers, but each type of content can be synced with only one computer.
Syncing over Wi-Fi is slower than syncing over a cable. If you connect a device to your computer while syncing over Wi-Fi, syncing continues over the cable. If you disconnect a device’s cable from a computer while syncing, syncing stops, even if Wi-Fi syncing is on.