This question has been brought up a bunch of times and the developers have answered that there really isn't a solution.

The problem is Canola uses Mplayer in "slave" mode which is used to embed mplayer into other applications. In this "slave" mode Mplayer isn't able to decode video quite as well as it is in "normal" mode (when it's run as it's own application).

Also, Mplayer has some issue handling streaming .flv which is what youtube videos are.

So there's nothing that the developers can do really :/ sorry there's no easy solution. You might try another youtube browser/player... there's some others that will launch mplayer as it's own application instead of embedding it.