How do you upgrade the operating system?

If you are on iOS 4 as your tagline suggests then you can only update via your computer's iTunes - when you've updated you will get a Settings > General > Software Update option on the iPad allowing future updates to be done directly on the iPad.

Connect the iPad to your computer's iTunes and copy any purchases off the iPad to your computer via File > Transfer Purchases. You may also want to copy photos and any important documents off the iPad as well e.g. via the file sharing section at the bottom of the device's apps tab when connected to iTunes, via wifi, email, dropbox etc - they should be included in the backup, but it's best to have a copy of them outside of the backup just in case. You can then force a backup of the iPad by right-clicking the iPad 'Device' on the left-hand side of iTunes and selecting 'Backup'.

Then start the update by selecting the iPad on the left-hand side of iTunes, and on the Summary tab on the right-hand side clicking the Check For Updates button

Updating to iOS 5+ : http://support.apple.com/kb/HT4972

If you update then you will go to iOS 6.0.1, which will remove the built-in YouTube app and the Maps app will change.

Typing "update iOS" into Google leads here: http://support.apple.com/kb/HT4623