Strange but not unexpected. Google Music doesn't work with my phone however it does attempt to replace the stock Music app by adding a second app called the exact same thing and anytime I try to play a music file it tries to load the Google Music app that doesn't work.
http://i.imgur.com/B9zb1.jpg
(and no I can't check that box to choose the default action. It doesn't work)
This is the type of stuff Google really has to sort out. It's getting ridiculous.
Last I checked the Video app only worked for the Xoom and has not yet started rolling out for any other device. Expect it to support the Nexus S once the new Market starts rolling out.