Yes, there is inconsistency.
This is possibly a translation error. In the English (Funimation) version of the show it is quite clear that Vegeta will be going to Hell along with Freeza and Cell. However, in other spots in the same translation there are similar references made about people losing their body when they die. Nothing about recycling the soul, but this explains the little ghosts you see floating around.
It is explained when Goku first arrives in Other World way back in the beginning of Dragon Ball Z, that the Kai allow certain people to retain their body as a reward so they can train forever.
It is unclear why exactly Cell and Freeza and others are allowed this privilege.
There are some more details on the Dragon Ball wiki.
Piccolo tells Vegeta that Goku kept his body when he died because he sacrificed himself to save the world from Cell, and devoted his life to fighting for good, and that Vegeta won't keep his body if he dies because he spent most of his life fighting for evil. However, true villains like Frieza, Cell, King Cold, Recoome, Burter, Jeice, Guldo, Dr. Gero, Appule, and Babidi did keep their bodies after death (the Ginyu Force can be explained because King Kai invited them over to show that Yamcha, Tien, and Chiaotzu could beat them, but the reason behind the others is unknown). Also, Piccolo, despite initially having an evil heart when he first died, was not only allowed to keep his body, but he also was allowed to go to King Kai's planet.