You should only use copyrighted songs on anything after getting consent from the person or company. This is how anything copyrighted should work!

Personally, I believe it should be fair use in most fan videos, however if the person posting is making money off of the video it is no longer fair use.

YouTube is a private company and should have right to monitor the content and shut it down if they are not comfortable with it. . . which in the long run may push people to sites that do honor fair use, but it is thier call.

The copyright owners - record labels, artist - have different opinions, but it is their preference that determines what YouTube do with your video.

The three guys who started YouTube quit in disgust and sold off the site because of the teen obsession with uploading copyright content.

The site was started as a place for people to share home videos, shot with video camera or cell phone with the users own sound - no copyright issues whatsoever.
The three founders got so much hassle from copyright owners that they simply couldn't take it any more and put the site up for sale insisting that teens had destroyed the site.

New owners Google are planning to install a MySpace-style copyright filter that will prevent delinquent videos from uploading successfully. The concept of a fan video is not recognized by either copyright owners or YouTube itself as it is seen simply as an excuse to upload copyright content.

The fact that teens simply refuse to stop and refuse to comply with the copyright advisories all over the site that has led Google to throw the site open to commercial users - record labels etc.