Shooting video or pictures with a tablet is still a remarkably goofy thing to do, but if you must, you may as well do it at the highest possible resolution.
With that in mind, the Nexus 7 is one of the last tablets that would come to mind for video shooting, simply because it only has a front-facing camera, and one that's limited to shooting at 480p. The enterprising team over at xda-developers have looked into the Nexus 7's video shooting limitations, and determined that it's not a function of the camera hardware, but one of the software definitions.
As such, on a rooted Nexus 7, it's as simple as editing some xml to tell it to shoot at 720p — although it's worth bearing in mind that you'll eat up even more of the Nexus 7's limited storage shooting this way.
Nexus 7 720p Video Recording [xda developers]