In PowerShell 2.0, it is still not possible to get the Copy-Item cmdlet to create the destination folder, you'll need code like this:
$destinationFolder = "C:\My Stuff\Subdir"
if (!(Test-Path -path $destinationFolder)) {New-Item $destinationFolder -Type Directory}
Copy-Item "\\server1\Upgrade.exe" -Destination $destinationFolder
If you use -Recurse in the Copy-Item it will create all the subfolders of the source structure in the destination but it won't create the actual destination folder, even with -Force.