Q: Can you upgrade an iPod touch version 4 to version 5?

To update

The Settings>General>Software Update comes with iOS 5 and later.

Connect the iPod to your computer and update via iTunes as far as your iPod model allows

iOS: How to update your iPhone, iPad, or iPod touch

A 1G iPod can go to iOS 2.2 via iTunes and iOS 3.1.3 via

Purchasing iOS 3.1 Software Update for iPod touch (1st generation)       

https://buy.itunes.apple.com/WebObjects/MZFinance.woa/wa/touchLegacyLandingPage

A 2G to 4.2.1. Requires iTunes version 10.X. If a Mac it requires OSX 10.5.8 or later. With OSX 10.4.11 you can only go to iTunes 9.X which gets you as high as iOS 4.1

A 3G to 5.1.1  Requires iTunes version 10.5 or later

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

Identifying iPod models

If you mean that you want to trade your fourth-gen iPod touch in and get a fifth-generation iPod, Apple does not take trade-ins. The retail Apple Stores in most countries will give you 10% off the price of a new iPod for recycling your old one, but unless your current iPod just doesn't work, you can get much more for your iPod if you sell it yourself. Some dealers have trade-in programs, but again you can usually get more from selling it on your own

Regards.