According to Ozcarguide.com the newest version of Flash might disable youtube for iPhone users. However they do not provide a reliable source for the information and we believe the flash version they are talking about is Flash Player 10.1.53.7 RC1.
Since the Flash client is only a release candidate we suspect the issue should be isolated to a few servers and probably fixed in the release version.
Adobe Flash Player Update Affects YouTube, iPhone Users Screwed
"If you've been over to YouTube today you may have come across a little problem. The recent Youtube upgrade has left users without the latest Adobe Flash player update unable to watch any of the videos."
Flash upgrade now available
"If you have a PC or netbook all you have to do is download the latest Adobe Flash player update to fix the problem. However if you're planning to visit YouTube on your iPhone or iPad then there may be a few issues. The latest Adobe software version, 10.0.45.2, does not work on the iPhone or iPad yet. While it sounds ridiculous for both Adobe and Google owned YouTube to leave Apple users in this predicament, it comes as no surprise as both companies have ongoing problems with Apple at the moment.
For starters, Apple's bid to block Flash applications in its latest iPhone 4.0 OS has led to Adobe working on a possible lawsuit against them. Additionally, Google has been in cut throat competition with Apple for some time now with their range of similar products. To summarize, Nexus One vs iPhone, iPad vs Google tablet and Chrome vs Safari.
The latest version of Flash can be downloaded from Adobe's official website"