Stephen's "isle of dreadful thirst" must be Ireland, with its insatiable appetite for "porter." But scholars have also heard in the phrase an allusion to the Proteus episode in Homer's Odyssey.
In James Joyce's Ulysses Stuart Gilbert observes that Pharos is described as an "isle of dreadful hunger," and that "such isles of hunger and thirst were only too familiar to Egyptian and Phoenician mariners" (124). In Book 4 of the Odyssey, the Greeks on the island are starving until Proteus's daughter Eidothea takes pity on Menelaus and tells him how to subdue her father.
Stephen, aware of all the new money burning a hole in his pocket, may be contemplating his own dreadful thirst. He has thought a little earlier of his promise to meet Mulligan at "The Ship, half twelve," i.e. in about an hour. He fails to show, but proceeds instead to the newspaper office, where after a decorous interval he proposes that "the house do now adjourn" to a pub. It is the beginning of a very long day of drinking.