I had a similar problem. After installing the update 2.3.4 my Nexus S was not able to boot anymore (stuck in the Nexus “X” animation forever).  

I know many of you believe it is a persistent hardware issue. In my case, I think it was the “low battery” issue the source of my problem but it end up with a software corruption.

After the update, the recovery mode was also “broken”. I had a custom recovery installed but it didn’t work anymore.  After the update, selecting “recovery” from the fastboot bring me to some sort of recovery “update screen” (a box with the android guy icon) and after that, the infamous “!” icon.  

In a desperate move I just “discover” (from the recovery mode after getting stuck in the “!” icon screen) -- pushing the volume key up/down while pressing the power key --, show a working recovery screen !!! … I was able to clean/factory reset my phone and …. it is now booting normally.