Here is an interesting article on Jesus and divinity in Wackypedia:
A part taken from that article:
Following the Apostolic Age, from the 2nd century onwards, a number of controversies developed about how the human and divine are related within the person of Jesus. As of the 2nd century, a number of different and opposing approaches developed among various groups. For example, Arianism did not endorse divinity, Ebionism argued that Jesus was an ordinary mortal, while Gnosticism held docetic views which argued that Christ was a spiritual being that only appeared to have a physical body. The resulting tensions lead to schisms within the church in the 2nd and 3rd centuries, and ecumenical councils were convened in the 4th and 5th centuries to deal with the issues. Eventually in 451 the Hypostatic union was decreed, namely that Jesus is both fully divine and fully human, making this part of the creed of Orthodox Christianity. Although some of the debates seemed to be over a theological iota, they took place in controversial political circumstances and resulted in a schism that formed the Church of the East.
In 325 the First Council of Nicaea defined the persons of the Godhead and their relationship with one another - decisions which were re-ratified at the First Council of Constantinople in 381. The language used was that the one God exists in three persons (Father, Son, and Holy Spirit); in particular it was affirmed that the Son was homoousios (of same substance) as the Father. The Nicene Creed declared the full divinity and full humanity of Jesus.
In 431, the First Council of Ephesus was initially called to address the views of Nestorius on Mariology, but the problems soon extended to Christology, and schisms followed. The 431 council was called because in defense of his loyal priest Anastasius, Nestorius had denied the Theotokos title for Mary and later contradicted Proclus during a sermon in Constantinople. Pope Celestine I (who was already upset with Nestorius due to other matters) wrote about this to Cyril of Alexandria who orchesterated the council. During the council Nestorius defended his position by arguing that there must be two persons of Christ, one human, the other Divine, and Mary had given birth only to a human and hence could not be called the Theotokos, i.e. the one who gives birth to God. The debate about the single or dual nature of Christ ensued in Ephesus.
The Council of Ephesus debated hypostasis (co-existing natures) versus monophysitism (only one nature) versus miaphysitism (two natures united as one) versus Nestorianism (disunion of two natures). From the Christological viewpoint, the council adopted hyposthasis, i.e. co-existing natures, but its language was less definitive than the 451 Council of Chalcedon. The Oriental Orthodox rejected this and subsequent councils and to date consider themselves to be miaphysite. By contrast, to date Roman Catholics believe in the hypostatic union and the Trinity. The council also confirmed the Theotokos title and excommunicated Nestorius.
The 451 Council of Chalcedon was highly influential and marked a key turning point in the Christological debates that broke apart the church of the Eastern Roman Empire in the 5th century. It is the last council which many Anglicans and most Protestants consider ecumenical. It fully promulgated the hypostatic union, stating that the human and divine natures of Christ co-exist, yet each is distinct and complete. Although, the Chalcedonian Creed did not put an end to all Christological debate, it did clarify the terms used and became a point of reference for many future Christologies. Most of the major branches of Christianity —Roman Catholicism, Eastern Orthodoxy, Anglicanism, Lutheranism, and Reformed — subscribe to the Chalcedonian Christological formulation, while many branches of Eastern Christianity - Syrian Orthodoxy, Assyrian Church, Coptic Orthodoxy, Ethiopian Orthodoxy, and Armenian Apostolicism - reject it.
The Councils do make it even more confusing. Paul believed Jesus was divine, James did not and that is where the first schism started. Paul is the one most Christians follow and quote when it comes to divinity questions.