Very soon google is going to release Android 2.3.4 update over the air to Nexus S Phones, but if you don’t want to wait for the update, you can manually apply the official update via recovery now. The big new feature that the update will add to your smartphone is the ability to video chat through Google Talk. That is a compelling reason to update for many people.
Here is the Guide to Manually update Nexus S to Android 2.3.4
1. Download the file here.
2. Place it in the root of your storage. And Rename the file to update.zip
3. Turn your phone off, reboot into the bootloader by holding volume up while you turn the phone back on.
4. Using the volume buttons, choose “Recovery” from the list and use the power button to select it.
5. You should see a triangle appear on your screen and at that point, hold down power and press the volume up button and you should see a list of options. Select “Apply Update from SD card”.