Press CTRL+ALT+DEL and let the task manager come up. Go to the "processes" tab and click on the CPU column to sort the processes by usage percentage, greatest to least. Keeping that window open and visible, move around in windows and surf the internet a little bit, going to sites like BITOG that don't use much multimedia stuff. Note any processes that use more than 80% of the processor while doing this. Also, look at the bottom of the window for the "Commit Charge: X/Y" and see if the number X approaches the number Y. Now, navigate to youtube and play a few videos. Keep an eye on those CPU and commit numbers and see if any process uses more than 80% of the processor for the duration of the video. Take note of those processes.
The percentages should be able to tell us if you have some superfluous program eating up cpu cycles. Or if the newer versions of Adobe Flash and Firefox are less efficient than their predecessors. I suspect this is the case, however there could be other, more complicated causes. Of course, it could be that no process takes more than 80% of your CPU. That would be the ideal situation.
If the commit charge number X gets to be a value > ~75% of the value of Y then you need more ram. You don't necessarily have to buy more, but you should start looking for programs that are memory hogs. Usually these are the things found in the notification area (that is, next to the clock) like Realplayer, MSN Messenger and other non-essential software. Exit these and remove any additional toolbars from your browser (Google, MSN, Yahoo, E-Coupons... whatever else), then close and re-open Firefox. The commit ratio should be more acceptable and video play may be improved.
If the commit numbers are within an acceptable range and no process takes more than 80% of your CPU then we have to look at your video card. Perhaps it's driver is outdated or it lacks adequate power to play some of the higher resolution videos on youtube.
Let me know, maybe we can get this thing sorted.