The problem manifests because the nvidia driver has the most advanced acceleration/gpu-decoding available (vdpau) and the flash plugin wants to take advantage of it.
The problem is that this is implemented in a way that triggers some bugs from the driver.
So this is both Adobes and Nvidias problem.
Adobe because shipped a product that fails to deliver its biggest improvement - i dont know how they tested it because i spotted these issues at first glance running a video from youtube...
And nvidia because, well, of course, the bugs. Now i understand that vdpau is a feature targeted to users of a small segment of users of their (newer) products so fully debugging it is not as easy.
I use the flash plugin that is bundled with Chrome. That has no such issues. And for youtube there is an excellent FF extension that replaces flash with mplayer - install mplayer (the vdpau-capable version recommended) and gnome-mplayer beforehand:
P.S. This issue is probably happening only to the newer nvidia cards that support VDPAU (8xxx series and up and some Quadro NVS ones).