So am I correct in assuming that all of the Ipod touch 1st and 2nd gen are obsolete?

I can't seem to download any apps for my second generation ipod touch. I have looked on forums and searched the internet on what to do with no avail. Please do not send me any messages saying that I cannot go any higher than iOS 4.2.1 because I know this and you will be wasting my time. Basically my question is what do the people do that own older ipods? Do we simply toss them out? I think that this is a little ridiculous, I paid for a product that I can no longer use simply because it is older.

"Do we simply toss them out?"
No.
"I think that this is a little ridiculous"
Since you don't just "throw them out", there is no "ridiculousness".
"I paid for a product that I can no longer use simply because it is older."
Baloney.  You can use the product, until it's no longer operational.  If it breaks, you can have it repaired outside of the warranty.

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