According to Wired, all that it takes to have standard videos upgraded to the 720p resolution (if they were taped at a high enough quality) is a small "hack."
To do so, take the URL of the video and add &fmt=22 to the end.
A good example to try this on is this video:
http://www.youtube.com/watch?v=zlfKdbWwruY&fmt=22
As you can see, I have added the &fmt=22 to the end of the URL. The quality is very good and it is good to see YouTube taking a step forward. Obviously the video sizes will be larger and make take longer time to stream if you have slower Internet connections, but the quality is much improved.