NOTE: I solved this issue by using a Windows 7 box, and am only posting this here in case it helps to troubleshoot the specific issue I saw.
I'm running ElementaryOS (linux) and was running the Espruino Web IDE via the Chrome plugin installed in Falcon (a slight variation built on top of Chrome).
I was able to connect to the Espruino WiFi board with no issues when in standard mode... could save programs to the board, make lights flash, etc. The issue came when I tried to flash the latest firmware (my board came with v1.91, was trying to update to 2v04. Per the instructions in the IDE I disconnected the USB, held down the reset button, reconnected USB, let go of button, and the board successfully entered bootloader mode ( red and green lights flashing). When I then tried to reconnect via the IDE it reported that it could not connect. I repeated this process multiple times with no joy.
I then switched over to the Windows 7 box, installed the IDE in vanilla Chrome, connected, ran a program, and followed the same instructions above to enter bootloader and flash the firmware. Had no problems at all.
Again, I only offer it here in case it helps future development in supporting Linux systems. The next time I see there is a firmware update I'll try it from the Linux box again and report back if the problem is solved or not.
Thanks... great board, love the low barrier to entry... nice work!