In the Finder, click the "Go" menu at the top of the screen and then choose Applications.
In the Applications folder, locate iPhoto
and open it. If it's the first time setting things up then it may ask a couple of questions.
Plug your iPhone into the Mac, it should appear in iPhoto in the sidebar at the left. Select it, if it isn't selected automatically.
Click Import All. If you want only some of your images imported, select the images and videos you would like to import into iPhoto, then click the Import Selected button.
When the photos finish importing, you will be presented with a dialog asking whether you'd like to delete the original photos from your Camera Roll. Click Delete Photos.
You should then be able to update the software on your iPhone.
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Thanks and good luck,