If you wanna watch youtube videos on your PSP you must :
1- Plug PSP to computer, in your PSP go press X on USB Connection.
2- Make a folder named VIDEO on PSP. (NOT IN PSP FOLDER, OUTSIDE OF IT)
3- Choose video you want in youtube then go copy the link and download it at
www.downloadyoutubevideos.com
4-You will receive the file called get-video on your desktop or where ever you saved it.
5-You must renamed the video to get-video.flv it doesn't have to be get-video, just make sure you finish it with .flv
6-Now you must convert video into a MP4 with PSP VIDEO 9, you can get it at
www.pspvideo9.com
7-When conveted go to your library in psp video 9, click open folder, it will open the folder of all the files you converted.
8-Finally copy the converted video into your VIDEO folder inside your PSP.
NOTE: Don't forget though, don't make the folder VIDEO inside PSP folder, make it outside of it. Videos didn't work for me until I did that.
Hope I helped someone.