Based on your logic we shouldn't arrest shoplifters either because it might build a bigger user base of Twinkie's, Pringles and Polo shirts.
Youtube is no better than Napster, Kazaa and all the rest and deserve to get sued into oblivion if they dont police their own network. The fact that they DON'T police their own network and it is OVERFLOWING with copyrighted works not owned by the people that uploaded them just cried out for a class-action lawsuit.
There are tons of America's Funniest Home Video shows clipped and a bunch of others, we ALL know it, Youtubes ALL knows it, and that fact alone means the safe harbor provision is already worthless and they can't officially claim the Sgt. Schultz defense "I KNOW NUTHINK! NUTHINK!" when it's on THEIR SERVERS.
At least Kazaa was on individual people's computers, not on a central server, and that still didn't help Kazaa avoid being nuked for facilitating copyright violations.
Bye bye Youtube, it's only a matter of time.