Q: help

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

If it has iOS 3.1.3 it can't go any further

Use iTunes to update.

Latest version avalible for iPod Touch is:

3.1.3 (1G)

4.2.1 (2G)

5.1.1 (3G)

6.1.5 (4G)

7.0.4 (5G)