Youtube already has specialist interfaces for smartphones, iPhones, Big screen TVs, and 6 or 7 different Flash versions based on quality/bitrate, size and codec. They can easily add another using HTML5, particularly if it provides a better experience for those using Google's Chrome browser or OS.
YouTube native on the iPhone was already a major blow to Flash (as was the whole touchscreen phone/computer paradigm). This will kill it (in conjunction with a bunch of other stuff Google is pushing under the umbrella of HTML5).
Video in Flash has always been an aberration created by dodgy patents, licensing considerations and competitive posturing of big companies, now the market can correct itself and Flash (for video and otherwise) is going to have to compete on its own merits. In brief: dead man walking.