jimikain has created an application that allows you to create playlists on YouTube in a easy to using interface called deskamp.
When you first go to the site you search for a song you want to here and add it to your playlist. You can then search for others songs you like or browse through suggested music or turn on Radio Mode that will randomly play suggested songs.
One feature that I really liked was that you can select the music icon to find a different quality of the current song you are listening. If you strictly want to only hear the music and not see the video there is an option to hide that as well.
Currently it is not working on the iPad or other mobile devices.
Application URL: www.deskamp.com