The polarization dynamics induced by the optical excitation of the s,p-band derived occupied surface state on Cu(111) are studied by a new technique, interferometric two-photon time-resolved photoemission. The polarization decay due to phase breaking collisions of the charge carriers on an $\ensuremath{\sim}20\mathrm{fs}$ time scale is modeled by the optical Bloch equations. The optical phase resolution also allows direct observation of nonlinear polarization oscillations at the harmonics of the excitation frequency, which lead to the surface harmonic generation.