This whole historical debate always causes a lot of misunderstanding, because when people think of nationalism they often also think of general in-group favouritism, patriotism, chauvinism, ethnic or national loyalty or xenophobia in the same category, so when they hear historians or social scientists like Ernest Gellner or Eric Hobsbawm arguing that nationalism and nations are modern creations, they think they mean that all these other things are modern creations as well.

However nationalism, as conceived of by these writers, generally refers specifically to the political ideology that emerged after the French revolution. In Gellner's words, it's "primarily a political principle, which holds that the political and the national unit should be congruent" (Nations and Nationalism, p. 1). I.e. this is referring especially to the movements in 19th century Europe for the unification of Germany and Italy, and for the liberation of other peoples from foreign rule, like Poland. This principle was also the one invoked by Woodrow Wilson after WW1 in the reordering of states that followed the destruction of empires like Austria-Hungary, and it has continued to today, as we see in nationalist movements in the European empires in the postwar period, and to Kurdish, Scottish and Catalan nationalism today. So this point about nationalism, as a political ideology, being modern, is pretty uncontested. Political ideologies are by their nature modern, as they're about taking control of a modern state and using it to structure society.

However regarding nations, and feeling loyalty to nations, in fact Europeans had been talking about people as being divided into nations (using this word specifically) ever since the Roman period (natio is a Latin word) (and previously and elsewhere in different languages of course, but I know most about Europe). The way they thought of these nations was pretty similar to the way we think about nations today - communities of shared descent, custom, laws, political tradition and language (though none of these was an absolutely necessary factor, just as none are necessary today). Canonist Regino of Prum, around the early 10th century, wrote "diversae nationes populorum inter se discrepant genere, moribus, lingua, legibus" (roughly, the people of different nations differ in descent, customs, language and law). The medieval period are absolutely full of examples of writers writing about nations and extolling their virtues, 'Deeds of God through the Franks' (12th C) and 'Deeds of the Danes' (12th - 13th C) are just two of many examples.

In some cases national differences were also used to argue for political boundaries in a similar way to today. The 14th century Scottish declaration of Arbroath is a good example, with Scottish nobles appealing to the Pope with the claim that they should preserve their independence from the English because of their separate history and separate descent. However it is true that in the premodern period, there were lots of other competing political principles more powerful than the national one, the two most important being religion and dynasticism. Modernists argue that in the modern period, once religion and dynasticism had fallen away in importance, nationalism then selectively used these older ideas of nations as raw material to create modern ones, but that the new social formation of the nation was fundamentally different. This is a popular view, but I don't hold it, preferring the view of someone like Susan Reynolds to explain what happened to nations in the modern period, who writes:

"Although the idea of nations as political communities looks to me much older than most students of modern nationalism assume, its impact was changed when it came to be associated with other quite different ideas about the structure of society and government, as well as with different economies and different technologies. What I argue is that it was those external factors, not a change in the basic idea of nations or peoples as political communities, that produced modern nationalism"

(The idea of the nation as a political community', in Scales, Len and Zimmer, Oliver (2005). Power and the Nation in European History)

Some famous works of the modernist viewpoint are Gellner's Nations and Nationalism, Hobsbawm's 'Nations and Nationalism since 1780', and Benedict Anderson's 'Imagined Communities'. On the other side, Azar Gat recently published a book called 'Nations: The Long History and Deep Roots of Political Ethnicity and Nationalism' that deals with the debate, arguing that nations and political ethnicity (the set of which modern nationalism is one element) are perennial facts of human history. He also takes a broader view than just looking at Europe as I have.