I think the problem is that YouTube made some changes in the site on July 22nd that affects all download extensions and plugins. Basically, is not allowing to get the videos using the old urls, so the player throws that error.
I suggest you try my extension FlashVideoReplacer. It allows to watch YouTube, Vimeo and Blip.tv videos using totem, gecko-mediaplayer, gxine, kaffeine, mozplugger, or xine plugins. The beast feature is that it replaces the video on site, so you don't need to start standalone players or download the video. There are limitations tho. It doesn't work on YouTube channels, just single video pages and flash needs to be installed to work.
The extension is for Firefox, but I'm working on versions for Opera and Chrome.