I cant update my ipod touch 2gen. Stuck on iOS 3.1.3

My iPod 2gen wont update. It says its up to date but is on iOS 3.1.3. I've tried to press update and restore it (several times) but still refuses to update. Hope someone can help

Are you sure you have a 2G iPod? Those can go to 4.2.1 and requires iTunes 10 or later on the computer.
If your iPod does not have volume buttons on upper left edge or an internal speaker it is a 1G. A 1G can only go to 3.1.3
Identifying iPod models

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