HT4972 My Ipod touch's version is 2.2.1 it doesn't have "Software update" on the Settings. I also tried updating the latest software on iTunes but it won't update to iOS 4 or later version.

when I clicked iTunes Check for Update it says- This version of the the iPod software (2.2.1) is the current version. Please help..is it possible to update the latest version?

You have a 1G (original iPod touch). those can only go to iOS 3.1.3 that you get here;
https://buy.itunes.apple.com/WebObjects/MZFinance.woa/wa/touchLegacyLandingPage

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