Simply appending &fmt=18 to a youtube video's URL, will give you the same 320x240 video in H.264 encoding at 480x360. Audio is improved too with 22K to 44K and mono to at least stereo (not sure if it can do any better as I'm still getting by with a 2.1). The difference in audio and video quality is immediately noticeable, provided the video you're watching is capable and you're not still using speakers or a monitor from 1980 ^_^.
Would be worth the effort if you are watching a particularly long clip, or a tutorial video which you can't quite make out with the normal quality. Or, a Futurama clip.
And before you tab-out to more adventurous places, it doesn't work on redtube.Here are linked-screenshots of the two versions of the same video. The first is the original, and the second is from the string-ified (&fmt=18) clip. Click to hear and see youtube in all its glory!
And to make life simpler, here is an extension for Firefox that will do this for you, and has a few nice extras too.