From The Back Room

Crunchgear has the article on how to ensure that the movie clips you upload to YouTube gets shown at the highest quality possible.

Important points:

1. $30 Apple Quicktime Pro is recommended.
2. MP4 format works best.
3. Video size should be 320 x 240 QVGA, YouTubes native size. By the way, that's a 4 x 3 aspect ratio.
4. Aim for 700 kbps to 1000 kbps bit rate for conversion.

For a different take on the settings to be used, read this comment by BayTaper(Dot)com.