Right now, apple is only accepting apps for iOS 3.2 and up.
so if you device is running anything lower than 3.2, you wont be getting any more app updates or new apps.
also the sad thing is that when updates come out for apps that are 3.2+ itunes will download the updates even though your device running lower version cant use the newer version of the apps.
Im about to list my first gen ipod touch on ebay for this fact alone. Its got iOS 3.1 and apple isnt going to be updating the iOS for it any more.