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: Mandatory: - Audio/Video playback (flash) - Wifi (Gmail, GCal sync) - eBook reader - Pocket size (iPod size or so) Desired but not mandatory: - Voice mic (for potential web conversation, and recording) - Video/photo camera - FM receiver BTW, I just saw Android 3.1 is out, is it possible to update these devices with the new OS?