Updating the iTunes software in an iPod does not erase any content in the iPod but just updates the software and is an easy and fast process. You don’t have to search for any updates for the iPod software as everything is doing automatically.

Here are the steps you have to follow to update iPod shuffle -

You should have the latest version of iTunes installed in your computer. You can get it from here. iTunes is available for Apple OS, Windows XP, and also Windows Vista.
The iTunes for windows 2000 is separately available and can be downloaded from here.

Connect the iPod shuffle to your computer or laptop through the USB port, and keep your iTunes open so that it detects the iPod attachment.

Don’t sync totally, just use the normal sync option with which the contents present previously won’t be affected.

If iTunes detects that a newer version of iPod software is available, you will be prompted to download and install the new version (internet access required). If the newest software has already been downloaded you may be promoted to install it.

This if being on Mac OS X, will ask for your admin details and you have to login to allow the download to occur. After you enter the login details, the download and update process starts in the iPod section. Then you will have to leave the iPod connected so the old memory is restored to it after the software is updated.

During the stage 2 of the update process, a green LED will flash once on iPod shuffle, then amber and green LEDS will flash briefly, and finally the amber LED will begin to flash continuously. It is critical that the iPod shuffle remains connected to the computer during this stage.

When everything is finished, the list is restored.