How to update my unlocked iPhone?

I have an iphone 3gs and its running on 4.2.1 for t mobile and i want to update it because i can barely download/update apps on my phone with the iOS so old. I have this app i really want/need but it needs iOS 5 but when i last tried to update my phone, it went back to the original iphone set up screen, but wouldnt detect my sim card so i had to take it back to t mobile and get it downgraded again and it was just really time consuming and pointless money spending. Is there any way i can update the os?

Go to settings, click on general, then click on software update

Have you tried restoring it? I had the same issue a couple of months ago with an iPod.

Your best bet is to save everything to a MicroSD card first, though, so you don't lose any important data you can't replace. Contacts save to your SIM card, usually, depending on preference.

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