Unable to update iPhone 4 via iTunes

Hi,

I'm aware that my iPhone 4 iOS cannot be updated via wifi because I'm running iOS 4.2, so I need to update to latest iPhone iOS via iTunes.

However, even after connecting iPhone to iTunes 10.6 on Macbook, and my iPhone is recognized as a device in iTunes, when I click on the device, pull up the summary screen, click on the "update" button to update to the newest iPhone iOS, the pop-up simply says I'm running the most current version if iTunes. Well, that's all fine and dandy but it's I'm clicking on the iPhone iOS update button, not iTunes.....Any help is welcome.

Thanks!!