Guess it depends on what you want to do. Nexus S is free from manufacturer bloat and should be pretty timely with updates, but we did see the Nexus One took a while to update to Gingerbread after release so who knows, going forward. It is without 720p recording, which I don't know if that is a deal-breaker for you but it certainly wouldn't have been for me, but it also lacks an LED notification light and whilst I'm sure I'd get used to it, I'm too into the habit of just glancing at my phone to see what's going on with it rather than waking it up all the time.
On the other hand, my new Xperia Arc landed in my hands this evening. Not had much of a chance to play, but seems a pretty neat piece of kit. It's incredibly thin! I never considered the HTC Desire I had before to be a particularly bulky phone, but this one is
so slim. Software seems fairly decent, with most tweaks being improvements and not bloat, although the Timescape widget seems to slow the phone dramatically when its updating itself so that might be disappearing very soon.
I'll post back a proper update once I've had chance to properly play with it this evening, but given the choice I'd go for the Xperia Arc. (Well, that's a kind of given - I
did have the choice and I
did go for the Xperia Arc

)