Yep true. Gen 4, the first iTouch with camera built-in released in 2010. And the feature of "volume button as a shutter" was introduced in iOS5 in 2011 if i'm not wrong. 🙂
As others have said, it was added in iOS 5. However, I find photos come out clearer when using the on screen button, as it doesn't cause the device to move as much.