The guys over at xda-developers just keeps on proving that rooting your phone is the only way to get the full potential out of your phone with CyanogenMod version 5.0.8test3. Now out of the box your not able to record video at 720p. But if you rooted your Nexus One you can have 720p resolution recording . As of right now it has some bugs to workout , but this is truly awesome hack which allows HD recording for this device.
Here are some samples;