Though YouTube is generally considered to be the king of all video sharing services, one downside has long been its inferior video quality compared to rival services such as Vimeo, DailyMotion, or Blip.tv. But going forward that may not always be the case, as it appears that they are quietly taking early steps at providing higher-res videos.
Apparently, YouTube has begun re-encoding the web versions of its videos when possible, noticeably increasing their resolution from 320x240 to 480x360 and improving audio quality as well. Not every video has been re-encoded into the higher quality, mind you, and no one really seems to be sure as to whether it depends on the format of video or perhaps its popularity. It appears however that the improvement primarily applies to newly uploaded videos, which are automatically produced in both the regular and high-quality versions.
The improved quality currently remains optional and must be activated by adding &fmt=6 onto the end of any YouTube URL. Alternatively, you can add &fmt=18 and it will play the high-resolution version when available, otherwise it will play the regular version.