BBerry8130 - Since you are automatically re-routed by YouTube to to m.youtube.com, as far as I can tell you can't use the "normal" youtube from your Pearl using the BB browser (which wouldn't work anyway - normal YouTube videos won't play on a BB). You're going to the mobile version automatically.
I played around w/this some more last night, and found that as Sith_Apprentice noted, most videos played fine, but some still resulted in the "incorrect format" error.
It's a lot of stuff to process, working through existing and new videos. They don't appear to be done yet.