To be honest I'd really recommend you buy the N810, especially as you are in UAE, I was over in Dubai in November, (with an n800) and the problem was you can't use it outside at all, the screen is just black (sun glare)
The N810 is supposed to be much better, although I won't be over there again for a couple of months - so I'd check it first!

I wouldn't recommend flashing the n810 OS onto the N800 - it can be done but I really wouldn't recommend it, gizmo mic/voice didn't work when I did it.
You can get OS2008 for the N800 anyway now, so there is no reason to, and then it plays you tube etc. no problems.
There are differences in RAM, but you should be OK (and the N800 has two replaceable SD card slots, so you can have quite a lot of space there!), whereas the N810 has microSD and only one replaceable slot, so at the moment that's only 2Gb+1Gb internal (at least I think the internal is 1Gb) - but that's enough for me at the moment.
Movies, not sure about divx and xvid but not had any troubles playing movies in general (you can always convert them), nokia has released a "beta" movie converter I think to make them optimised for the tablet. [M$ OS only :-(]

As far as you tube goes, it can handle it ok from my point of view, but it can be a pain as far as trying to scroll whilst watching a video, as I think that pushes it as far as it can go (but it is smooth)

But if you want it to be 100% then no, but it is smooth from my view point - just a pain that everything pretty much grinds to a halt whilst the video is on!

Cheers,

Malc