YouTube seems to use a much crisper codec than Google Video. I have run several animated clips through both of them and there is always a notable difference in quality, and always in YouTube's favor. I'm a big fan of most of Google's recent projects, and think they have a better model for long-term viability. (Ever wondered what will happen to all of your YouTube videos if the company burns out? Or to the embedded YouTube videos in blogs and websites?) But I can't handle the compression level.
Here's a sample clip uploaded to both sites. It's a three-slide PowerPoint that intends to communicate the effects of supply and demand on price to seventh-graders (the image of the sun in the background relates to its inclusion in a teaching unit on nuclear energy). In keeping with the goal of minimizing onscreen text, there are pauses (including a few-second pause at the beginning) for instructors to explain to students what they are seeing.
I haven't experimented exhaustively with this - no live action, for example - but the difference seems clear. I guess this would be Reason #11 for some people. Google is also having problems with image rendering in its Picasa Web Albums, currently in "Test" mode, which I blogged about previously here, here, and here.