There are several free and easy ways to download YouTube videos and convert and transfer them to watch on your iPod or in iTunes.
For Mac Users:
Just use Podtube with Safari. It's that simple.
Alternately, you can download the file using the methods outlined in step one, below, and then use iSquint to convert the file to mp4 format.
For Windows Users:
1. First, download the file. In Firefox, you can use an extension, Video Downloader for Firefox. Also works for Google Video, MySpace, iFilm, and more.
If you use Internet Explorer or another browser (though this also works for Firefox users), just copy the link of the YouTube page for the video, paste that in the textbox at KeepVid.com, and download from there.
2. You'll then need an FLV player to view the file. VLC is excellent, and there is a version for most operating systems.
3. If you plan on watching it on your iPod video or PSP, there are several options:
b. Videora iPod Converter. A free program that converts videos of all sort (not just from YouTube but also .avi, .mov, .flv., etc.)
c. For PSP, encode to the mp4 format with PSP Video 9
Now you can enjoy YouTube videos even when you're on the go!