Update it from iTunes on a computer as described at the bottom of this article; there isn't a Software Update option in General on iOS versions prior to 5.0. It can only be updated directly to the newest iOS release supported by the device’s hardware.
The maximum iOS version for the first generation iPod touch and original iPhone is 3.1.3.
The maximum iOS version for the second generation iPod touch and the iPhone 3G is 4.2.1.
The maximum iOS version for the third generation iPod touch and original iPad is 5.1.1.
The maximum iOS version for the fourth generation iPod touch and iPhone 3GS is 6.1.6.
If you don't know what device you have, append the last three characters of its serial number to http://www.everymac.com/ultimate-mac-lookup/?search_keywords= and load the page.
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