The quality of YouTube videos on the iPad varies depending on the type of connection. The YouTube application automatically lowers the video quality for 3G data connections. In April 2011, there is no possible method to adjust the quality settings in the YouTube application on iOS devices. But there is an alternative solution to adjust the video quality on the iPad. This method works for both Wi-Fi and 3G.
Open the Safari browser on the iPad and type “m.youtube.com” in the address field at the top.
Select or search for a YouTube video that you want to watch.
Touch the “HQ” button under the video to adjust the video quality. When the button is red, it means that it is showing high quality video. When the button is gray, then you are seeing playback in low quality.