There is no way that I am aware of to reduce the file size of the entire clip on the phone. There MAY be apps out there - you would have to check into that.

One thing that you CAN do is trim the clip (assuming you have iOS updated to the latest version). Open the video clip in the camera roll. Along the top, there is a timeline with "grab handles" at both ends. Grab one or the other and drag it left or right. A "Trim" option appears in the upper right corner. Drag to where you want to crop the video and tap that Trim button. This is handy if you have several seconds of video at the start or end of the clip that can be cut out and this will also reduce the file size. You can play the video before trimming to make sure you have the handles set where you want them. Once in iTunes, you can locate the file on your hard drive and use any number of apps to do all sorts of things to the video.

Edit: iMovie lets you do all sorts of neat video editing right on your iPhone and you can then upload right to YouTube and several other services. Then just send the link via email.