YouTube is changing its video setup to allow a High Quality video to be shown if you submit it in that format.
Unfortunately, that means most of the 320x240 videos will never look very good.
Jake Ludington has a good article about this on his site:
http://www.jakeludington.com/youtube/20080318_make_youtube_videos_look_bett...
He also sent me this response as to how he sends in HQ videos to YouTube.
"Minimum 640x480 for all videos. I always use WMV format because in my testing it seems to look better. I shoot everything in HD, so I normally try and use 1280x720 when it fits in the 100MB limit or resize to 960x540 if I cross the size limit threshold (and they recently extended the limit if you use the upload tool). It's VBR with quality set to 90% and encode complexity set to the maximum."
