I find a very nice web which tells you how to watch your favorite YouTube vids on iPod. Maybe you are also interested.
You must do this with a converter.
With this tool, you can download, play, and convert youtube vids to MP4 or MP3 format your ipod suppports.

Install and start the converter to your computer.
1. download the video (it will automatically be saved to your hard disk)
2. convert the video to mp4 format (or mp3)
3. then sync the converted file to your ipod with itunes.


You can search "flv to ipod" on google.com for more info.
Hope you also like it.