It will come as no surprise to most Nexus One owners that their phone is capable of much more than the factory settings allow. AndroidSpin reports that one of the developers over at the XDA forums has managed to get 720p recording to work on his Nexus One. To use this update, your phone will need to be rooted and you will need to have Froyo Radio installed.
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You can download the update here. If you've been on the fence about whether or not to root your phone, this may tip you over the edge. 720P recording is a pretty big step forward for the Nexus One's camera.