I was shocked at this too. I heard youtube was pretty bad with edge, but know how slow it is, just getting youtube streaming I thought was good enough. But with 3G, it seems like they didn't change it take advantage of the bandwidth, so it's the same quality as with EDGE. Which often is blurry, giant macroblock mess. With wifi, some of the stuff I've seen is as sharp and clear as itune music videos.
Even worse, I like to use youtube for music, so I don't care about the picture quality all the time, but even the audio takes a noticeable hit too.
Also, the MLB at Bat instant replays look horrendous over 3G, maybe worse than youtube. I think it reminds me of the days when streaming was new over dialup.
I sure hope they update youtube app to take advantage of 3G, or a Safari starts to support flash for at least video features like the real youtube.