This is the scenario facing owners of the i Phone 4. To help you make an informed decision, I've compiled the reasons in favor of and against upgrading an i Phone 4 to i OS 7 below.
The combination will work, but it may be slower or more problematic than you'd like. In terms of modern consumer technology, that's ancient.
Please note that at the time this answer was posted it was valid, however, it's now over two years later and even though the file can still be downloaded, I do not know if it can still be used to restore from as its certificate might now be expired.
If anyone has tested a recent restore and it worked, it would be nice to know.
But don't worry: the process is pretty painless.
Here's a guide that explains exactly how to get the latest i OS software on your i Phone.
If you own an older i Phone, there's always a question that arises when Apple releases a new version of the i OS: Should you upgrade?