The updates won't show on your phone because the phone has to be running IOS 5.0 or higher in order to have that feature. With a 3G, the highest IOS level you can upgrade to is 4.2.1, and you must update that via iTunes on your computer.
So, we need to address the issue concerning iTunes not recognizing your phone.
- What kind of computer are you hooking up to?
- Have you backed up your iPhone on this computer before?
- When version of iTunes are you running?
- When you say it won't recognize it, are you saying the Device does not show in the sidebar under Devices?