Well yeah, YouTube's 'HQ' is not really HQ in a sense of a quality of a DVD, the picture is still not clear enough (and 'HD' isn't DVD quality either, but you can't expect a video bitrate of 7200 kbps for an online real-time watchable media stream). But still, the HQ button matters a lot. Just compare columns 'Standard' and 'High (non-default)' in the following table and you'll see why the differences are dramatic:
http://en.wikipedia.org/wiki/YouTube#Fo ... ison_table" onclick="window.open(this.href);return false;
(Actually, the MP4 container is the default one for HQ, the page is a bit outdated.)
Also note that AAC is superior to MP3 at the same bitrate (provided that you compress an audio of a CD quality or so.)
But of course for those vids that aren't uploaded in a good enough quality, HQ doesn't make much difference. Just to compare, my latest video (called 'Angry Spy at Work', sorry for the advertisement

) was 172 MB originally, after uploading it's 38.5 MB in MP4 and 20.1 MB in FLV. That just shows again that HQ is nearly twice better than NQ.