Other reports in this forum suggest that the click-through rate from video sharing sites is not very high - presumably every little helps, but there are probably more efficient ways to increase traffic.
I think it can be effective if you are selling a product that can be effectively demonstrated in a video, and it helps too if there is some "fun" aspect to it.
A good example is a product that I purchased a while back for a video project. It's a camera mount that uses big suction cups to attach to a moving vehicle.
The company has gone crazy with demonstration videos - showing not only the usual application attaching it to a car in various positions, but to boats, airplanes, etc.
Using YouTube offloads their server load for these videos, but at the same time the videos are cool enough to appeal to a broader audience. I'd bet they get quite a few customers from people stumbling across their videos on YouTube and saying "hey, I want to do that!"