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I think it depends on your settings. I just uploaded this:
http://www.youtube.com/watch?v=7kr0GzDNvZY
and it's still stereo and still 400x300
There is NO BETTER way to put youtube videos up except making flv files. What your flv file ends up like is exactly what it'll end up like on youtube. Youtube doesn't recompress when you use FLV as your upload file.
The .flv looks slightly better IMO, but the .wmv loads MUCH faster...!
I'm creating my videos with Windows Movie Maker and it gives several options when creating the video. Here are the details on the option that I choose, I hope this is what you're looking for....
Bit rate = variable
Display size = 640x480 pixels
Aspect ratio = 4:3
Frames per second = 30
Again, I hope that's what you're looking for.