This has been reported by many, I think elsewhere on this forum and on other sites like XDA & Sprint's site. Consensus seems to be if you step down from the highest resolution of 1280x720 (HD) to the next highest resolution of 720x480, you'll be ok. Whenever I record at the highest resolution, I will always get a failure. It could be 5 seconds or 10 minutes into the recording, but it will always fail. I tried reformatting my card, which seemed to help for a while, but I think it was placebo. The only person I'm aware of who solved the problem completely bought a higher class SD card with faster transfer rates than the OEM card. I'm assuming the OEM card can't always keep up with the throughput requirements of recording HD video.
Interesting that @lrn2swim has had no problems since installing Truly Epic Rebirth. I installed that ROM a couple days ago, I'll have to give video recording a try again. Personally, I've had the video recording failure with all 2.1 and 2.2 ROM's I've tried (only at the highest resolution though).
EDIT: Well that didn't take long, my HD video test on TER 1.2 lasted about 5 seconds before failing...