Aqueous zinc oxide (ZnO) suspensions were prepared using a two-step preparation method in which an aggregated nanocrystalline ZnO powder was dispersed in water using a polyelectrolyte. The fluid showed anomalously high thermal conductivity when compared with the Maxwell and Hamilton-Crosser predictions. However, analysis of the particle size distribution showed that the fluid contained aggregated 20 nm crystallites of ZnO with a high volume fraction of particles larger than 100 nm. Sedimentation experiments revealed that particles settled out of the stationary fluid over times ranging from 0.1 hours to well over 10,000 hours. The size of the particles remaining in suspension agreed well with predictions made using Stoke's law, suggesting flocculation was not occurring in the fluids. Finally, a new concept of nanofluid stability is introduced based on the height of the fluid, sedimentation, Brownian motion and the kinetic energy of the particles.