when youre on the youtube page, go to Window>Activity, then check out all the links. double click on the one that has the biggest size, something in the 5++++ mb. it will download automatically, then you add the extension .flv to it. Download iSquint (free) and put that .flv file in it, it will convert it to ipod format...
App that also works:
TubeTV, free on apple site if i remember right
Stop reading signatures and read the good stuff up here^