:( You can't..the 3.1.3 O.S. update was the last and final update for 1st gen iphones and ipod touches. The iOS4 update is not compatible with the 1st gen models as they are to slow to run it.
Sorry, but only 32GB and 64GB of the new iPod Touches will support iOS. The 8GB even uses last model's hardware, and can't support it fully. You are going to be stuck having to buy the 32GB ($300), or the 64GB ($400) to get the full benefits.