For those who don't know how to update follow these steps:
Download the update file (Two post above this one)
Copy the file to your phone’s internal storage (/sdcard). The Nexus S can flash any file so there is no need to rename it update.zip
Power off your phone.
Hold down the VOLUME UP button and power it back on.
Use the volume keys to navigate to recovery and press POWER to select it.
When you see the “/!\” symbol, hold the POWER button and then press the VOLUME UP buton.
You should be presented with the Android system recovery menu. Select the option “apply update from /sdcard”
Find the update file on your sdcard and then press the POWER button to flash it.
Wait for the update to complete and then select “reboot system now”
EDIT: I think you can also just download it straight to the SD card.