I mounted my card in Linux as /media/CANON_DC and copied both DISKBOOT.BIN and PS.FIR to this directory - but when I put back my card in S2 IS, nothing happens - there is no option for Firmware update.

What am I missing? :-(

Done! Go to "Preview" mode, then select "Menu", where you will find Firmware update at the bottom.

Press [S] button on camera for <ALT> mode.