unless your nephew is destined to be a pro basketballer, I'd say 20" wheels would definitely be too big. (I'm over 6' myself, and ride a bmx with 20" wheels, and 20.75" toptube. toptube is the most important measurement for a bmx, and is measured from the centre of the steerer tube, to the centre of the seatpost usually)
had a quick look at 18" bikes, and this one is actually VERY good:
http://www.customriders.com/prodshow.asp?prodid=15936&cat=57&parent=1010&sid=3 (custom riders are also an excellent shop, mainly dealing in high end BMX parts, unfortunately out of stock at this moment, but worth ringing to see if they can still get them/shopping around for one!)
diamondback are a well established make, and it has decent parts which will handle some abuse before you need to upgrade. obviously as he can't even ride on flat ground yet, it will be years before this is a concern, by which point, he'll probably have outgrown it.
until he reaches the point where he wants to hit jumps/ramps, you really don't need anything too special, even something as 'bargain basement' as this would do fine for a few years:
http://www.bikes2udirect.com/B6131.html,
although it would be worth getting the lightest bike you can find/afford, as lightweight bikes are infinitely easier to move around under you and control.
just found another which carries many of the same benefits as the diamondback, but does look a bit heavier:
http://www.bikes2udirect.com/B5111.html