There seems to be some confusion about the "Flash support" on the iPhone as I am having the same conversation multiple times.
Here is the deal as I understand it:
1. The iPhone does NOT support Flash. Not the current player, not the 10.1 player, and not the player that will come with CS5.
2. Flash player 10.1 will be supported by "most" smart phones. These phones should come out in 2010. "Most" does NOT include the iPhone.
3. Here is the tricky bit: CS5 will be able to export to an iPhone app. Again, this does not mean that the iPhone is supporting Flash, this means that Flash is exporting in a format that is accepted by the iPhone INSTEAD of exporting as a SWF file. 8BitRocket summarizes this well by comparing it to the process of exporting an FLA as a Projector file.
What does this mean? Well it means that Flash developers should no longer need to learn Objective-C to develop iPhone apps. Hopefully it will be a painless experience to develop for the iPhone. But who knows, Keith Peters and a few others have expressed their doubt that it will be smooth sailing... That's right right Keith, I am calling you out ;). Personally, I can deal with some hurdles and some restrictions as long as the performance is there in the end.
What does this NOT mean? This does NOT mean that we will be able to put SWF files on the iPhone. It does NOT mean that we will be able to make websites for the iPhone or content within websites for the iPhone.
From a business perspective, this seems to be the perfect compromise between Apple and Adobe. Apple maintains its App Store and its revenue for selling apps, but it loses its strangle hold on the Objective-C development. Adobe, on the other end, gets its foot into the iPhone arena and becomes an instant player on the iPhone app development front, but it still does not have its holy grail of getting Flash browser support on the iPhone.
It will be interesting to see if Apple accepts this compromise or if it pushes back in some manner.