Just started beta testing today.  Video is fairly smooth but quality hurts a bit versus flash.  My guess is that will get better as the standard evolves.

Supported Browsers

Right now we support browsers that support both the video tag in HTML5 and the h.264 video codec. These include:

• Google Chrome
• Apple Safari (version 4+)
• Microsoft Internet Explorer with Google Chrome Frame installed (Get Google Chrome Frame)

Learn more at http://www.youtube.com/html5