My 32 GIG 3G Ipad has the you tube icon but when I watch you tube the picture quality is very bad. I am using the ATT plan to connect.
However when watch netflix with streams also it is better. Anyone have any ideas?
( THIS BAD QUALITY IS ONLY WHEN I AM NOT USING WI FI)

I'm pretty sure Youtube gets downsampled when you're using a 3G connection to save bandwidth. It's not happening when you're on wifi, that's why it looks better. I'd imagine the same is true on Netflix. On jailbroken iPhones you can run an app called 3G Unrestrictor to trick the iPhone into thinking its on wifi when it's really on 3G in order to prevent downsampling. Unfortunately it does require a jailbreak and I haven't heard whether or not 3G Unrestrictor is iPad compatible.