I use a Sanyo VPC-CG10.
You can upload the output of almost any camera to YouTube - they can convert most formats - but the HD mode of my Sanyo produces huge files which would take forever to upload.

I do use editing software Avidemux which is free and multi platform (important as I'm on Linux) for a number of reasons:
- I usually record sound separately and mix back with the video (better sound that way)
- I can cut the tops and tails off the recording
- I can recompress the video data. This gets file size down for a typical 720x1280 video from about 250MB down to 50MB, with a slight loss of sharpness but still good quality.

I've found that Youtube's processing distorts the sound less on HD uploads that it does on lower resolutions. For some reason, others seems to get away with low resolution upload and get better sound than I do, but I've give up trying to work out why...

Anahata (anahatamelodeon on YouTube)