Q: how do i update to ios.7?

Which model iPod do you have?

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 6.1.3  Requires iTunes version 10.7 or later. For a Mac, that requires a Mac with OSX 10.6.8 or later

A 5G to iOS 7. Requires iTunes 11.1 if y update via iTunes

Identifying iPod models

If you 4G iPod (has cameras) currently has iOS 4 then you have to connect to computer and update via iTunes

iOS 4: Updating your device to iOS 5 or later

You need iTunes 10.7 or later on the computer.

As illass has told you,  you CANNOT update the 4th gen ipod touch to ios 7.

What iOS version is currently on the iPod? Settings>General>About>Version?

yu say yo have a 4G iPod thos can only go to iOS 6.1.3

All the iOS devices compatible (iPhone 4 and later, iPad 2 and later, and 5G iPod touch) with iOS 7 have at least 512 MB of memory (RAM). The 4G iPod only has 256 MB

As you have been told, you have the latest available software for you ipod.

There is no later software for you.