iPod Touch 2g Can't hardly play youtube videos anymore

Hi all,
My ipod touch is mostly used for playing youtube videos and surfing the web around my home.
Lately, the youtube videos have not been loading up and/or lagging out on download/buffer of the movie.
My network and wireless is running perfect. I even brought it to work (professional ISP connection) to try there. It does the same thing.
Click on the video and it says loading video with the little circle spinning away. I can be right next to the router and no difference. Sometimes I can click on 'done', click on the same video, and it starts to buffer quickly, then stop at about 10%. Sometimes it stops at other percentages.

I have restored it 3 times and this 4th time, i restored it from DFU mode.
Restored it to my originally saved config, then tried creating it from scratch.
The youtube still lags out.
I'm 80% sure it's software OS related on this thing. I can surf web pages great.
Youtube is just about unusable.

model MB528LL
Version 2.2.1

Please tell me what to do.
Thanks,
Mike