I can't tell you what in-game says unless you can show me a screenshot (or wait until my game arrives next week), but I think the typo is 99.9% probably Fangusu.
For one, it says "Fangasu" on a piece of official artwork on the official site, and it would've been really really difficult for the makers of the website to miss it. XD Imagine the makers of the official Pokemon site spelling Pikachu "Pikamoo" on the main page. It'd be about the same.
Secondly, I decided to do a Google search using both Japanese spellings and see which one turned up more Japanese websites about Telefang.
"Fangusu Terefangu" only got 3 hits on google. Two weren't about Telefang, and the third was our Wiki. XD Oops.
"Fangasu Terefangu" got 8 hits on Japanese sites, including this:
http://www.enpitu.ne.jp/usr6/bin/month?id=65870&pg=200304
Random Japanese blog. Partway down the page:

So if Fungus is a typo, it's one they made on the official website and other Japanese sites, and the only place that got it right was our Wiki, which admittedly has a lot of mistakes with its Japanese right now. See how unlikely that is?
If you can find me a screenshot now I can tell you 100% ^^;.
Edit: Hang on! Found one!

From the official site. It's kind of small, but you can tell it says Fangasu and not Fangusu. Case closed!
The text there reads something along the lines of: Fungus attacks! Claw!
Maybe phrased a little differently. I'm bad at grammar. XD
In light of this, is it okay if I go edit the Wiki to change to Fungus? Considering him and his evolutions are all mentioned on many pages, it will take some work. I'll go ahead and fix the kana where I can find it.