You can now insert YouTube video clips inside Google Documents much the same way as you embed videos in Google Pages or the new Google Sites.
Just place the cursor anywhere in your Google Document, go to the Insert menu and paste the YouTube URL (watch the screencast).
It gets better – if your video is not on YouTube, you can upload the clip online via Google Docs itself. Haven’t tried this myself but I guess the videos are uploaded to Google Video – Picasa also uses Google Video for uploading video files.
Update: Google has rolled out support for YouTube only in documents, the feature is not in Google Spreadsheets or Google Presentations yet.