Crunchgear has a great tutorial about optimizing videos for uploading to YouTube.

You may have noticed that some videos on YouTube simply look better than others. This is because they came from better sources. With a little tweaking and a little know-how, you can prepare your video for YouTube in a way that spares us all from oversized pixels.

The first step is knowing what format you’re starting with. Most digital cameras today shoot video, as do most phones, which is a great cheap way to start. Sadly, the videos created tend to be worse than that 3rd-gen VHS copy of Cheerleader Carwash 8 you found under your brother’s bed. If you can, pull your video from a digital camcorder. Most Mini-DV cameras include Firewire out, so if you’ve got a fairly recent Mac you’re set. Or you can get a Firewire card for your Peecee pretty cheap.