You are too technical to understand that consumers don't really care about flash at all. They don't understand the argument whatsoever. It is two sides of geeks yelling nonsense back and fourth.
Take your argument: Justin.tv. According to Alexa, it's barely in the top 400 highest traffic sites on the net. I doubt anyone in the mainstream has even heard of it. YouTube, on the other hand, is the #3. And there is an app for that. Hulu.com is 196, and Vimeo is 169.
If you have YouTube playback, you have all the video 95% of your customers wants or needs. For the rest, there are apps.
Nobody is buying smartphones on technical features, just like nobody is buying an iPad because of how much RAM it has. People are buying smartphone because of its Use Cases. Because it has free turn-by-turn navigation. Because it can play games online. Because it can SMS. Browse the web. Recognize the song playing overhead at lunch and buy it online. Take pictures (that's really the only flash consumers care about).
Flash is actually coded by chipping if-thens and loops into stone tablets for all of time.
http://itunes.apple.com/us/app/farmville-by-zynga/id37556266...
Both Farmville (60+ million users) and Mafia Wars (45+ million users) have been ported to iOS.
Or ported as in "You have to do X,Y,Z"?
If it's the later, I don't think it particularly matters. Most people just want it to work. They consider a browser should function as a browser.
http://itunes.apple.com/us/app/farmville-by-zynga/id37556266...
Most people are going to want to go to a website, and have it work. A native app doesn't cut it.
There has been almost no major technology to emerge since the debut of iOS that is really dependent on Flash. Zynga and Hulu were the last major players to emerge with prominent Flash utilization, and they've heavily invested in iOS since. To the contrary, iOS exclusive (at least to begin) apps like Angry Birds and Instagram have captivated the tech press and public imagination.
Really, as an iOS user since the first gen, I don't feel left out of anything. To the contrary, iOS continues to get the best stuff first - Kindle, Netflix, the latest iD and Epic games, the best social networking clients, the best new games that people on other platforms clamor for (Angry Birds, Cut The Rope, etc.).