YouTube API for Android brings easier in-app playback (and ads)
We're going to assume that the delay had something to do with Google wanting to add in the new enhanced ad functionality that we've seen with YouTube on Android where users can skip ads on videos after a certain amount of time. That allows Google to know when users are really watching the video (or ignoring their device til the ad is done), and theoretically charge more for that ad.
Either way, the new YouTube API allows developers to easily add YouTube videos to apps with support for fullscreen and changes to orientation, closed captions, and of course the ads. Native playback should also make performance better. The in-app videos will be available on the vast majority of Android devices because support goes all the way back to Android 2.2.