The YouTube blog says, Bigger Isn't Always Better... But in This Case, We Believe It Is, "We're expanding the width of the page to 960 pixels to better reflect the quality of the videos you create and the screens that you use to watch them. This new, wider player is in a widescreen aspect ratio which we hope will provide you with a cleaner, more powerful viewing experience. And don't worry, your 4:3 aspect ratio videos will play just fine in this new player."
This image below shows a 16:9 video in the new default player:
The majority of feedback on the blog post was negative with most people outraged pleading that this new feature be an option and not a default while many others embraced it saying it's about time. This change follows on the heels of the recent HD hack that enables a higher quality viewing at 720p. YouTube may be gearing up for more professionally produced higher quality content created in 16:9 like full-length films from MGM in an effort to compete directly with Hulu.
Other sites like Blip.tv, Vimeo, DailyMotion and SmugMug have already offered video in the HD aspect ratio. Aspect ratio and quality are different. See YouTube's help document on how to upload better quality videos but keep in mind that you'll want to transition to the widescreen format if you want your videos to fill the player.