Do you think Google will just let Google Video and YouTube co-exist as they do now, or will they try and attack different markets with them, or will they end up combining them/sharing content between them?
I think they may be shooting themselves in the foot if they try to keep promoting competing services...
I think the presence of the the National Archive videos on Google Video is one major difference between the two, and could be an indication of further future differentiation - as you say, YouTube does the popular stuff.
The fact that Google Video also allows for pay-per-view videos may also indicate future direction.
However, with Google's main function being search, I can also see YouTube videos cropping up when you do a search on Google Video. Branding Google Video as a more of a search tool could be the way it goes.
From the YouTube blog:
you won't have to start paying for videos and YouTube won't be replaced with Google video. We aren't going anywhere.
Whatever happens, I expect to see some sort of indication of direction well within 2 years...