I have always found the YouTube application to be pretty pointless without WiFi. When I had the original iPhone I could understand the quality loss while using Edge as the primary network source. However, with the 3G and 3GS there should be a lot less quality loss while using the 3G network. I understand it taxes the network a bit, but I would rather wait the extra 5-10 seconds for it to load then have it play with horrible quality.
The only time I have found myself using the YouTube application is at home in my person WiFi spot. I have never once tried to show a friend a video over 3G because they would expect the iPhone to be able to produce a clear video over AT&T's network.
That is just my two cents.
(Edit: I never actually contributed to the original post. I will say that my YouTube application does take longer then all of my other applications to load. I have an iPhone 3G 16GB.)