I got this phone on the 3rd, with 2.3.4 preinstalled and was never able to get wifi working. Then the 2.3.5 OTA update came, which I thought might fix the issue. It still did not. A few days ago, I decided to change my router's encryption method from WPA to WEP to see if it would make a difference. It did. I am now able to use wifi with this phone.
However, the wifi reception on the Nexus S 4G is really quite terrible. I literally have to sit within a 7-8 ft radius of the router to get a strong and stable signal. When I try to use it in my bedroom, which is probably 15-16 ft away, the signal drops down to 1 or 2 bar and would randomly just drop.