Thank you for replying. Quite valid questions. I have around 100 people to serve with 5 Mbps link. What I want is to penalize people watching youtube in HD or doing http downloads of bulk files should get lower priority than, people who are just checking their mails (gmail) / light web browsing. I have a simple NATed system with a linux gateway (Centos 6.2) with WAN on one side and LAN on another. Iptables does the rest. So, when somebody watches a heavy youtube video, another user suffers from slow browsing speeds. Just wanted everyone to get a fair share of the bandwidth, so as there is no single hogger.
Hope this clears my intention and my current infrastructure.