This is from the "Troubleshooting AirPlay" article:
If the AirPlay icon doesn't appear
Check for the AirPlay icon ( ) in the recently used apps section on your iOS device, or in iTunes on your computer (as in these articles about how to use AirPlay and how to use AirPlay Mirroring). The icon will only appear if your device or computer is logged onto a Wi-Fi network which has an AirPlay-enabled recipient, such as Apple TV (2nd generation or 3rd generation).
If you are still unable to see the AirPlay icon, try one of the following steps:
- Verify that your AirPlay-enabled devices have the most up-to-date software or firmware.
- Verify that your iOS device has Wi-Fi turned on. Enable Wi-Fi on your iOS device by going to Settings > Wi-Fi.
- Verify that all your AirPlay-enabled devices are logged on to the same home Wi-Fi network (check the home network names on your devices to confirm).
- If trying to AirPlay, or AirPlay mirror, to your Apple TV (2nd or 3rd generation), ensure that AirPlay is enabled on your Apple TV as well. You can enable or disable AirPlay on Apple TV in the AirPlay menu: Settings > AirPlay
- Check Internet or network connectivity on all affected devices.
- Temporarily disable firewalls (both network and local) and security software. Security software and firewalls may block ports that AirPlay uses to stream content. You can often resolve issues with security software by updating, correctly configuring, or uninstalling security software.
- If attempting to use AirPlay from a third-party app or a website from your Safari app on your iOS device, confirm that the app or website is AirPlay compatible (refer to the developers of the app or website for additional information).
The entire article is at http://support.apple.com/kb/TS4215
Apple want you to buy a new phone. Although fully capable on any iPhone 3G and beyond, aiplay and mirring are dependant on the hardware and not the ios version. AirPlay is only supported by certain apps on iphone 4 and earlier, and mirroring is not supported on anything earlier than the 4s model. Only 4s phones and beyond have been chosen for full support of both airplay and mirroring by Apple.
Regardless of what you want and what your current phone as actually capable of , Apple wants more money.