Can I update my IPod Touch wirelessly?
You can. Go to Settings > General > Software Update if you have iOS 5 or later. If not, connect the iPod to the PC and iTunes will ask you to update to the latest version
Your profile indicates your have iOS 4.1. You need iOS 5 or later to update wirelessly. But if you have a 2nd generation iPod touch, the latest version for that iPod is iOS 4.2.1.
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