Apple iPhone 3G 8GB Black Factory Unlocked?

So I bought the phone listed above off Ebay, got it activated through Straight Talk. I can call and text and do normal stuff with it. BUT. I can't install/download anything at all! Not through the phone not even through iTunes. It says I need iOS 5. And I can't update to that. So I need some help on what to do!
Also, A friend of mine said Apple discontinued that version of the iPhone? So I have no idea.
Any advice on how to update or what to do would be muchly appreciated!

Yes your friend is right. Some apps still work for this phone but most are discontinued as this phone can't be updated past 4.2.1

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