Currently Apple has stated that YouTube is changing some of its video formats at the moment to make them more compatible with the iPod Touch so most of them cannot be played right now. If you are seeing the message: “This Movie Could Not Be Played” when you try to watch a YouTube video, it will be fixed hopefully soon. You do not need to follow the youtube fix guide to fix the problem. The problem resides on YouTube’s side at the moment.
http://youtube.com/watch?v=Na4×2Uwflmg <— This video works to confirm its not a problem on your side.