recently i noticed the the block tag_youtube does not show video thumbnails
it appears, Google no longer support the old RSS/XML format as described in:
http://code.google.com/apis/youtube/migration.html

so i read through the new API (version 2):
http://code.google.com/apis/gdata/docs/2.0/reference.html#Queries

and luckily, found IBM's implementation for it, too:
http://www.ibm.com/developerworks/xml/library/x-youtubeapi/
(thanks IBM, we love you)

and i have made a little patch to the moodle/blocks/tag_youtube/block_tag_youtube.php file

see comments with instructions of how to apply the patch