I finally managed to get the nVidia ION to work properly with the adobe flashplayer. I went from laggy 320p youtube videos to perfectly smooth 1080 youtube videos.
To get this to work, you need the latest nvidia drivers (at least 260.19.21, I've got 260.19.44), they include VDPAU which is what is needed, you can find them on the nVidia website or in the Wheezy repositories. You also need a recent enough version of flashplayer which includes VDPAU. Try to get the latest beta from here: http://www.adobe.com/devnet/flashplayer.html. At the time of writing, you need the beta.
After installing, you should check that it indeed contains the necessary VDPAU librairies. This is what I get:
$cd /usr/lib/adobe-flashplugin $strings libflashplayer.so | grep -i vdpau H264 - VDPAU - CPU H264 - VDPAU - VDPAU libvdpau.so libvdpau.so.1 GL_NV_vdpau_interop glVDPAUInitNV glVDPAUFiniNV glVDPAUUnregisterSurfaceNV glVDPAUSurfaceAccessNV glVDPAUMapSurfacesNV glVDPAUUnmapSurfacesNV glVDPAURegisterOutputSurfaceNV
Now, make sure this is the version in use by your browser (usually about:plugins should tell you that).
This should be about it... but it actually still didn't work for me. But I found the following fix that miraculously solved it for me: create the file /etc/adobe/mms.cfg, and write in it:
For reference, you can try this video http://www.youtube.com/watch?v=4N2YWRJ-ppo. For me, at 1080p fullscreen, this runs at a constant 25fps (you can see this by right clicking and then "show video info"). Before this, it was completely unwatchable, with one frame every 3 seconds I'd say!
I hope this is helpful!