Please how do i upgrade my ipod touch 4th generation to ios 7?

It can't be updated past 6.1.6.

(130498)

so thats it. no other options, just done. buy a new one. really?

No, you can keep using it and it continues to operate. It does not have the system RAM, processing power, and other hardware capacity to run later releases of iOS (and built-in software features).

Just because a computing device's OS can't be upgraded/updated further doesn't mean that the device stops working, as you are already aware.

Your 4th gen iPod Touch will work as it always has.

Up until a year, ago, I was still using an older 2nd gen 8 GBs storage iPod Touch, running iOS 4.2.1, that I used for nearly 8 years!

I am still using that olde iPod Touch 2nd gen from time to time in addition to my much newer 6th Gen, 64 GBs storage iPod Touch.

That's a BIG hardware upgrade!