When youre logged in to your YouTube account, click Account. Then under the Account Section look for Video Playback Quality. Click that and then this is what youll see:


Once you save the settings, the higher-quality videos will play when they are available. This way youll never have to click the link below the video to watch this video in higher quality. If it seems to be loading slow, they do include the link to go back to the lower quality video.

source;
http://cybernetnews.com/2008/03/12/watch-youtube-high-quality-videos-by-default/


example of a high quality youtube video
http://youtube.com/watch?v=2WYQQRMLtcc