Below are the steps I took to upgrade my Nexus S to CM 7.1 recently.
- Step 1: Download the update-cm-7.1.0-NS-signed.zip file of CyanogenMod 7.1 for my phone.
- Step 2: Transfer the .zip file to the root folder.
- Step 3: Turn off my phone once the transfer is complete.
- Step 4: Boot into ClockworkMod Recovery mode by holding volume up and power buttons.
- Step 5: Using the volume up/down (to navigate) and power key (to select), then navigate to backup and storage > backup.
- Step 6: From the main menu: install zip from sdcard > choose zip from sdcard > update-cm-7.1.0-NS-signed.zip
- Step 7: Once flashing is complete, reboot and it is done.