ipod 2nd gen 16GB
Can i update to IOS4?
iPad 2, iOS 3.1.2
If it is truly a 2G iPod Touch, then you can update to iOS 4.2.1, but nothing after that. Make sure you are running the latest version of iTunes before proceeding with the update.
iOS: How to update your iPhone, iPad, or iPod touch
You might want to use this article to help you verify whether or not you have a 2G iPod Touch.
B-rock