Don't believe everything people tell you but you may need a 2GB SD Card. http://www.wiihacks.com/recommended-...d-any-wii.html
You can always try the 4GB one though, you might get lucky that it works throughout the softmod process.
DVDs work find on 4.0+, they just don't work on brand new d3-2 drive Wiis.
You can upgrade to 4.1 by using special homebrew updating apps, included in the tutorial I linked above. Avoid Nintendo internet update, it is a pain to be on 4.2.