Even understanding that the mobile web version of YouTube actually provides much greater functionality than the standalone app, I used it.
I'd prefer to put the YouTube app's development in the hands of Google - let it be reside in the App Store like Gmail and Google Earth and Google's other products. Apple's anemic effort to keep it updated was annoying.
It's refreshing to get an official word about a change from someone at Apple, though.
I've kept using the YouTube app since it frees Safari up for other tasks while I put it in the background playing a concert or something. Not that I can't do the same with two browser apps, but it's what I've gotten used to.