The iPhone 4s has a great camera - its fine for YouTube IMO.
I used to use mine for recording for about a year and it was fine, no issues at all, and full 1080p. One thing to note is an external mic is desirable. I have an iPhone mic adapter that I had imported from the US, and I can use it to connect my external lapel mic - works perfect.
Couple it with a tripod, an iphone tripod adapter, and a video light, and you have a pretty good YouTube setup - and its all cheap stuff as well (except fo rthe iPhone of course!).