Yes, I have a Galaxy S, never been rooted or flashed, it was on 2.1 when I got it and I've updated regularly as new firmware is released via Kies - it's now on 2.3.6.
As for how - I installed Kies on my pc, plugged my Galaxy in with the USB lead, if there's a new firmware available Kies tells me and asks if I want to upgrade. I just say yes and let it get on with it, following the on-screen instructions (which pretty much say to leave it alone until it's finished). Takes 5 or 10 minutes, no drama. I generally do a factory reset because I've read that it helps, although to be honest I've omitted to do so a couple of times and it didn't seem to make any difference.