Hi Heather78
When in youtube app press the phone menue key, this will allow you to check if your settings are set to always default to high res video, make sure this is off and you may find that it runs smother.
I have never experienced any problems watching videos using a wifi connection although when watching youtube videos via a 3g connection the video sometimes sticks.
I downloaded the app 'tube mate' which is bassically youtube with the benefits of being able to download videos onto your device or as an mp3 file.
When accessing a video through this app it will ask if you want to connect via youtube, tube mate or internet.
I found connecting via internet when not using wifi alows the video to buffer faster meaning no stopping during play.
Hope this helps Matt.