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Yeah it's a major frustration for me too. Youtube videos were coming through ok on the stock browser, but never on the Youtube app. I've been trying Steel browser lately but videos don't play on it well through youtube or in the htc flash player. Really frustrating when you think that Google owns both youtube and androidand should be able to come up with a way to make them work.
 
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I just found a thread from a google search on google forum. Someone said to use the WiFi (like DragonBro). I just played a video without a problem. It said it was in HD but it didn't appear to be...my friend has an Eris and played a video for me that looked crystal clear, so perhaps the video I was watching just can't be played in HD.


Edit Update: The video I watched was in HD, watching another video in HD that is a lot more clear and better looking.

I hope the app works better when the new update comes out because we can't always be connected to WiFi.
 
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