The 3g is basically a modified original i Phone, it is ever so slightly more powerful but not enough to run i OS5.
If you do not have a Software Update option present on your i Device, then you are trying to upgrade to i OS 5 or higher.
No more updates for the i Phone 3G will be forthcoming.
Ultimately Apple released updates to the OS that improved performance on the i Phone 3G.
I have an Iphone 3g spare in the house but realised that it is on IOS 4.2.1 I really need to know whether it can be updated there must be a way.
Notable feature additions in later releases included 4.1, which introduced Game Center, and 4.2.5, which delivered the Personal Hotspot feature to i Phones used on the Verizon network.
For full details on the release history of the i OS, check out i Phone Firmware & i OS History.