Not sure if it's due to HTML5, but I can now watch hires YouTube videos. Previously I couldn't. However, it's only possible through the safari browser on the YouTube site. If I load the YouTube app then I still can only play the lowres videos. This tells me that it must be something to do with HTML5 which doesn't require a plugin ie flash...hence only works from within the safari browser.
All good for the iPhone. Previously I was very annoyed that I couldn't watch hires YouTube videos on my iPhone. Now it's possible! Yeah!