You can use your iPod to watch YouTube videos on it. All it takes is a few minutes of work. Here are instructions:
1) Visit http://www.keepvid.com
2) Enter the URL of the YouTube video in the box and click on the Download button.
3) Keepvid will process the video and present you two links for downloading the video: video.flv – Low Quality 320×240 and video.mp4 – High Quality 480×360. Choose mp4 because that is the format iPod supports.
4) Save the file to your computer and rename it to the title. Then save it to your iPod in the videos folder or some other directory where you can find it easily.
5) On iTunes, go to videos, click open and you can view the video.
This is the easiest method because you don’t have to download and install any software on your computer. Also, you will not get any problems like other YouTube video downloaders.