With WordPress 3.1 released recently, many people noticed that embed video button in Visual Toolbar went missing. Lots of hue and cry were raised in WordPress support forums. But recently, WordPress developer Andrew Nacin clearly stated that the Embed Video button won’t make it into the next release and it was not a bug but removed intentionally.
Check his official reply:
The plugin was removed due to licensing issues. It should never have been included in WordPress, and was never used by many. It won’t be coming back to WordPress core.
You should look at the oEmbeds feature: http://codex.wordpress.org/Embeds.
I imagine there are other plugins out there that may be able to leverage this, but the plugin would not be compatible with the WordPress license.
There you have it. And here’s the ticket where full details and discussions about removing this button from core can be found. You can go through the changesets in the ticket to add back the button but its time you should look for alternative plugins or other methods to add your videos because the button’s gone for good now. You can try WordPress Plugin directory for more Video plugins like Viper Video QuickTags, Video Embedder or any plugin that fits in your bill or you can try pasting the embed code manually in HTML view. But then you will need to take care that while editing posts, you don’t accidentially switch to Visual view which will break the embed code. To prevent this, you can disable the Visual Editor from your User profile page or disable it by post-by-post basis by using Deactivate Visual Editor.