YouTube currently lets folks choose between 360p, 480p, and 720p resolutions, distinguishing the latter two with the letters "HQ" and "HD," respectively, in the player interface. Google doesn't say how it will present the new resolution, but it does note that material already uploaded in 1080p format will become available at full resolution soon. Nobody should need to re-upload any hefty video files, hopefully.

http://techreport.com/discussions.x/17956

Demo of Toy Story 3 Trailer in 1080p (hit fullscreen) or add &fmt=37 to any 1080p movie you do find on Youtube