The Nexus S Launch Page at one point listed "HD" video recording as one of the features. On the specs page, though, it said it recorded in 720x480, which is ED (Enhanced Definition) at best. The features page has since been edited and the mention of HD recording removed. That's partially what led to a lot of the confusion.
As danetweedale mentions, the site claiming 720p is probably confused by the 720x480 figure.
Now before you get all disappointed, I think the Nexus S does a great job at recording video, even though it's not HD resolution. I've had the chance to compare videos with the Vibrant, which does record in 720p, and I really feel that the Nexus S' video looks better, with a smoother framerate and a nicer picture.
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