You can use iTunes to update or restore iPhone software. You should always update iPhone to use the latest software. You can also restore the software, which puts iPhone back to its factory condition.
The free iPhone OS 3.0 Software Update includes some great new features, as well as all the features from previous updates. iPhone OS 3.0 also lets you run the next generation of iPhone apps, like peer-to-peer games1 and more. If you’ve never updated before, now is the perfect time.
To update or restore iPhone:
Make sure you have an Internet connection and have installed iTunes 8.0 or later from www.apple.com/itunes.
When iTunes opens, select your iPhone under Devices in the Source List on the left.
In the iPhone Summary pane, click Check for Update.
Click Download and Install. Do not disconnect your iPhone until the update has finished.
Requirements:
OS X 10.4.10 or later
iTunes 8.0 or later.