I know when browsing youtube on PS3, it doesn't come up with a HD option.
I have found a way around this:
1. Find your Video on youtube
2. Press Start, and add "keep-" (without the quotations) before the word youtube
3. On the next Screen click on "Download HD MP4 Video" (Icon at the bottom right of the page) or any other quality you want to
Et Voila, your video will start streaming in HD.
If you want to actually download the video, and not stream it, hover the cursor over the "Download HD MP4 Video", click Triangle, File, Save Target