SharePoint seems confused as it is displaying the numerical (integer) representation of 8/18/2013 (US) which is 41504. Your formula displays a result directly in Excel, although the days difference is 2, not the 3 that it displays.
You might simplify it with:
=TEXT(Modified-Created,"d ""day(s)"" hh:mm:ss")
which in Excel displays
2 day(s) 17:34:00
I am not able to test it from SharePoint though.
I suppose if you really want to display either day or days then you might try:
=TEXT(Modified-Created,"d ""day"""&IF(VALUE(TEXT(Modified-Created,"d"))>1,"""s""","")&" hh:mm:ss")
This could possibly be simplified (if SP can cope) to:
=TEXT(Modified-Created,"d ""day"""&IF(Modified-Created>1,"""s""","")&" hh:mm:ss")