plays fine on my ps3. though i only watched 10 mins of it.
what is your internet speed?
it could be just a matter of not being able to buffer in time and instead of freezing the app (what it use to do) it just closes the app itself to circumvent it.
the youtube app itself isnt the most relable so anyones guees as to that the cause of everyone's various issues with it are up in the air. i myself havent had it working until very recently after i upgraded my harddrive. the fresh install seemed to fix any stuttering and freezing i had with it.