Another reason is to help ensure that your applications run at optimal performance. You may want to perform a iPhone software update when you find that alot of your favorite iPhone applications lag at one time or another. To resolve this annoying lag issue, it helps to update both the actual iPhone applications and your iPhone software on your device.
It is so simple to update your iPhone software. All you need in order to perform the update is your iPhone, the sync/charge cable that your phone came with, and a computer that runs iTunes 7.7 (or higher). Please make sure before you update that you version of iTunes is up to date itself (iTunes reminds you when to update and it does it OFTEN, too often IMHO).

- Connect your iPhone to your computer running iTunes 7.7+using your sync/charge cable that came with your iPhone.
- Open iTunes on your computer.
- Select iPhone in the Source List (the list on the left side of the screen).
- In the Summary panel, click "Check for Updates" to see if there's a new version of the iPhone software available.
- Click on "Update" and this will install the latest version of the iPhone software onto your device.
Orignal From: How-To: Update Your iPhone Software
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