@nexusplz,  thankyou for all your findings and feedback on this thread,  had the same problem as all here.  I have a nexus s and up until this morning all was fine.  Had to restart my phone for my operators updates and that was it, I was stuck with the google logo and the soft keys lit up.  Connected to the phone via SDK and PDA drivers but could not get any communication.  I returned to the recovery screen just looking for options, had a browse through the SD card looking for any kind of file that may help, unable to find anything I backed out of the SD card back to the recovery screen and went for a random reboot.  Still dont know why but it worked!   A total of 2 hours and about 20 - 30 reboots.  Just to confirm my battery was never low, and once rebooted battery was at 77%.  I intend to look at rooting now as 2.3.4 seems a little 'iffy'.  Thanks again for your input in to this thread.