H.264 is the HTML5 video format. HTML5 hasn't been fully standardised (and God knows W3C have been trying for years) but the H.264 format is (as far as I know) supported on iOS. My web browser defaults to H.264 and the majority of YouTube videos have it available.
Under 'TV and Video' Apple state that H.264 is a compatible format. There is probably a way to default to this on YouTube with an iPhone but I don't own an iPhone so I couldn't tell you how.