why cant i update to 4.3.3 from 4.2.1?

I suspect you have a 2G iPod. Those can only go to iOS 4.2.1.

Identifying iPod models

iPod touch (3rd generation)

iPod touch (3rd generation) features a 3.5-inch (diagonal) widescreen multi-touch display and 32 GB or 64 GB flash drive. You can browse the web with Safari and watch YouTube videos with Wi-Fi. You can also search, preview, and buy songs from the iTunes Wi-Fi Music Store on iPod touch.

The iPod touch (3rd generation) can be distinguished from iPod touch (2nd generation) by looking at the back of the device. In the text below the engraving, look for the model number. iPod touch (2nd generation) is model A1288, and iPod touch (3rd generation) is model A1318.

iOS 4.3 and above require more onboard RAM than the iPod Touch 2G includes, which is 128MB.

Still many things your iPod Touch can do but your app store options are dwindling fast.

Now if Apple would just include a header option to list the minimal iOS for an app it would make finding these older apps that still exist easy, instead of irrationally difficult.

What version of iTunes do you have on your computer?

A 4G to iOS 6 Requires iTunes version 10.7 or later. For a Mac, that requires a Mac with OSX 10.6.8 or later

So to be clear, iTunes recognizes your iPod Touch 4G which currently has iOS 4.2.1 and iTunes says as of today's date that iOS version is up-to-date? Is that correct?

Your iPod does have the cameras, right?

Then you do not have a 4G iPod. Only the 4G and 5G iPods have cameras and the 5G came with iOS 6 initially. I suspect a 2G iPod.