I don't know how people listen to music on Youtube. The audio quality on those videos at less than 720p is unacceptable. Even people that walk around listening to 128kbps mp3s can tell when I ask them to swtich from 360/480 to the 720p stream.
I think the non-HD videos actually have monaural sound. When you switch to 720p, you get your stereo back.
There is noticeable difference between 360p and 480p stream on Youtube already. They somehow managed to degrade that much for little bitrate difference.
Instant gratification beats quality for most people.