Will installing the latest version of itunes let me update my iphone 3 software?

It's on 4.2 at the moment but i need at least 4.3 to download some of the apps i need

No i do not believe so, because some apple devices have an update freeze, so unfortunately your probably stuck with 4.2 forever or unless you get a new phone

You can try, but you should also check if the firmware you want to install is compatable for your phone. Try pressing restore, it should restore and update your device. But, if you had previouslly jailbroken your iphone with the ipad firmware when you can't update