There are many ways. I personally used this one.With it, we can one step to download FLV videos from YouTube.com and convert them to MP4 format iPod supported.
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I use www.keepvid.com. All you have to do is copy and paste the URL of the utube vid you want, click "download" and you can download it as an mp4. Then its just the simple matter of importing it into your library and putting it onto your iPod. Its easier than downloading an .flv and converting it.
This is the one I usehttp://www.any-video-converter.com/products/for_video_free/