I FINALLY GOT YOUTUBE WORKING on 1.1.4...
Step 1: backup your settings and files on itunes
Step 2: restore iphone to default( this will erase everything)
Step 3: try Youtube before Jailbreak to make sure its working
Step 4: ***important*** run ziphone for JAILBREAK only!
YouTUBE remains working. when I tried to DO-IT-ALL youtube never worked afterwards.
Step 5: Sync iphone to get your settings, contacts