Picture this... I run a plumbing store called Utube. I've operated in the same location for 10 years. Suddenly a new store opens up right next to me that sells TVs and is called YouTube. There are no identifying visible indicators as to which store is which, other than signs on each that say Utube and YouTube. For whatever reason, YouTube becomes super popular, to the point that I now have so many customers in my plumbing store looking to buy TVs that it's impossible for me to do business.
Although that analogy has holes, which really aren't present in the internet context, I think it helps to better visualize the situation. Basically, if you ran Utube, you'd be pissed too. I'd be doing the exact same thing. Negligence may be hard to prove, but causation would be the best approach. In the above analogy, YouTube would likely be found negligent, because by them opening a shop with a confusingly similar name right next to mine, they caused the problems to occur. If it weren't for their actions, I wouldn't have been harmed. Proving this in the context of the Internet may be extremely difficult though and will come down to the question of whether it was reasonably foreseeable that creating a website with a similar name would cause harm.
I think as domainers or developers, a lot of us would agree that this is the exact type of situations we try to avoid, which adds credence to their claim of foreseeability...
While YouTube has no control over their users, theres is no doubt that harm has been directly caused by their existence. Maybe a court finds that they should have foreseen the likelihood of this and therefore used a different name. Maybe they won't. But it's not easily discreditable for either side, so those who are saying this lawsuit is a joke, really should do more research.
Personally I find this to be more interesting than any WIPO cases or other TM law suits, because it will have a major impact on what is considered a reasonable precaution to take when starting a website outside of the obvious trademark laws... Personally I'd like to see this go to trial, but I doubt it will.