YouTube depends on Flash for its most profitable enterprises, which are advertisements before the video you're trying to watch, rental, and so forth. I don't know why they can't implement pre-show ads in HTML5, but rentals, etc., can't be done in HTML5 because they require DRM.

There was a big post a while back about all the things YouTube needs to do in Flash instead of HTML5. The fact of the matter is that HTML5 video puts several of YouTube's main money-makers out of order, at least temporarily while the logic is re-implemented.

Edit: The post from YouTube about why they still need Flash is at http://apiblog.youtube.com/2010/06/flash-and-html5-tag.html .