What region/country do you live in?
Check out this link
to see if your handset is supposed to have already been updated to Android 2.1. The X10 phones start further down. The numbers are "“SI-numbers” – that number can be found on the label of the back of your phone."
If your phone's SI number is not listed, then the update may still be coming for your phone.
If your phone's SI number is there, but you are still on Android 1.6, do a restart, have your phone check for updates, and if you still can't get it to update, then let me know.
You can install any free app onto your phone using a file transferred from you PC as long as you have the .apk file. Without an .apk file available, it is not possible.