I can’t update my YouTube app there is plenty of room

You can't update YouTube because you don't have a current enough version of iOS on your aging iPad. Your signature suggests your iPad is at iOS 9. YouTube now requires iOS 10 or higher. Thus the reason you cannot update the app.

Does it affect anything if you don't update it? I would ignore the request to update and keep using whatever version that's currently installed if it doesn't affect anything.

If it blocks your old YouTube app from accessing their servers and forces you to update the app, you're out of luck.