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What's the difference between Android 2.2 Froyo and Android v1.6 Donut?

I am really new to Android and I barely know about it.

I now want to buy an Archos device that should be an alternative to iPod and its size should be like the iPod.

I saw there are different Archos devices.
I am doubting between the Internet tablet (Android 2.2 Froyo) 43 and the 48/5 (Android v1.6 Donut).

What is a better OS? What is more advanced?

My desires:

  • Audio/Video playback (flash)
  • Wifi (Gmail, GCal sync)
  • FM receiver
  • eBook reader

BTW, I just saw Android 3.1 is out, is it possible to update these devices with the new OS?