I've got the same problem where hd YouTube plays fine on 3g but not on WiFi. Apparently the problem can be solved by going into your router settings and changing the dns to Google's. So dns1 is 8.8.8.8 and dns2 is 8.8.4.4. I can't confirm if it works though as I have a bthomehub which doesn't let you change the dns settings.
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