I had my site which is online since 2005, had my best month last month Aug 2009, thinking of having educational videos that explain how to set the product and how to use it, we sell items that get installed on doors so a video will for sure show more info than images.
The question is, have you done this to your site on each product level and what returns have you got as suppose to normal text and images?
I have not done it on any sites I run, but if I had an ecommerce site I certainly would. Youtube is probably the best place in the world if you want to see a product in action. A lot of my recent purchases have been items I viewed online to see just how good/bad they where.
Supplying info in the conventional way (text and images) works ok, but if you can produce a quality video that gives the potential customer all the info they need it will be good for sales.
No matter how you impliment the videos on your site, I would definatly upload them you Youtube, this will make your products visable to a wider audience. Be sure to have your site url within the video and also the youtube description.
On your own site don't have the video autoplay. What ever method you use on your own site, have the video triggered by a user action. "see demo video". This will keep your users happy, and will save you a chunk of bandwidth.