Why is this important? HTML5 is an open standard, not owned by any company (including Apple), it's much lighter on CPU and battery life than Flash, and doesn't suffer from increasing malware attacks or onerous "cookie"/privacy issues the way Flash does.
And while it may be purely coincidental that this beta comes on the eve of an expected Apple tablet announcement (a device that will surely benefit from better CPU and battery, not to mention security and privacy), it's interesting to remember that the last big change in YouTube -- the move to H.264 -- occurred back with the launch of the original iPhone and its YouTube app.
Now, it should be pointed out that the HTML5 beta is only available for YouTube.com proper right now, and not for videos embedded elsewhere. But here's hoping that's the next step. (And that Firefox decides to spend some of their Google Search revenue on licensing MP4 so we get a, you know, standard standard).
If that happens, if automatic buffering is fixed, and if other companies follow suit (the way Vimeo and even Microsoft SilverLight are already doing specifically for the iPhone), we could be seeing the beginning of a huge shift in online video, one that will crash headlong into Adobe's plans for Flash 10.1.
If, if, if. Fair enough. But most of the time when people complain about the lack of Flash on the iPhone, it's not actually the lack of Flash that bothers them but the fact that a lot of the video they want to see is wrapped up in Flash. If YouTube is an early bellwether that things are changing on that score, and people start getting their videos without Flash, we're guessing the complaints will in large part evaporate.
UPDATE: As The Reptile points out in the comments below, Google owns YouTube and Google is all-in on WebKit as the foundation for the Chrome browser, Chrome OS, and Android browser. They've shown repeatedly they'll push for standards and for the faster adoption of web technologies because it benefits them. Since Apple's Safari is WebKit, it benefits iPhone users as well. That makes this interesting.