I am playing Batman Arkham City on Windows platform. Many a times while playing the game shows that a Gadget Upgrade is available but I don't know how to process it. Some Armor upgrades do come with a 'Tab' key but I guess gadgets have a different follow-path.
The upgrades are tied to your EXP bar (the green bar above your health indicator). Every time you get a certain amount of EXP (I think it's 5K), you get a point to invest into an upgrade. These upgrades are spread over 5 categories: Batsuit, Combat, Gadget, Predator and Catwoman. You can switch between these categories by pressing the labels at the top of the upgrade screen.