iPod model MA623ZD

Hi-

I bought an 8G iPod model MA623ZD since 2008 and i did not operate it since then. Now that my children grow up they discover it and i have to find out how to get started! Though i have the following qns:

1)When i tried to get the most updated iOS i got 1.1.5 version. Is this the most updated version for that model and is there a limitation about the version that i can get because of the model itself? I'm asking because for my iPhone 4 i have 6.1.3 version which i cannot find it for my iPod.

2)When i tried to open iTunes from my iPod, i got the message "Cannoty connect to iTunes Store". How may i fix it?

3)How may i add applications

I'm sure that more qns will come up but this is for the start.

Thanking you