Flash is used for delivering ads (no thanks) and video (already covered by special-casing sites like YouTube). Flash is used for silly game sites, and we've got enough games on the iPhone (thank you very much (said by someone who has a non-game app (http://grafly.com) that's drowned out by all the game "noise" on the App Store ;-)).
Flash is the proprietary web, undiscoverable, unsearchable.
Flash is owned by entirely by Adobe, who make no bones about trying to build an entirely separate world in Flash to attempt to dominate the web and the desktop (AIR).
No thanks.
Edit: And, as antirez has pointed out, HTML5+JS+CSS are working hard to obviate Flash. With Google and Apple and Mozilla on their side, I think they have a good chance.
Then special casing is not ideal and i'm fairly sure flash does get indexed these days.
Its apparent you don't want it, but does the iPhone need Flash? I don't know - i don't have one, but i would think its only a matter of time.
http://www.mozilla.org/projects/tamarin/
Adobe was also a big proponent of SVG standard (for vectorial graphics) with their very own plugin, until they purchased Macromedia.
Because Macromedia did a incredible, really great job pushing their plugin into the vast majority of browsers (google flash plugin penetration ~ 99%). They accomplished that by making a tool that web developers wanted and people liked, with a smaller plugin and better than any other company: fast animations (remember the pain of making gif89a or a java applet?), mp3 sounds! (remember midi, wav, au, aiff or the BGSOUND tag?), typography, any font! (not just Arial, Helvetica, Verdana, Times or Georgia), vector graphics that downloads and renders fast (is there any website using SVG now?), streaming video embeded into the html page (better than real player, quicktime or windows media, because it works almost for everybody, except the iPhone users, except when watching YouTube), microphone and webcam support, and now (with flash 10) they are putting 3d inside their plugin (before anyone could say OpenGL ES).
In an ideal world we would have solid standards, but in this world we have the W3C, and the abandoned XHTML2 or CSS3, unimplemented by the browsers CSS2, SVG, SMIL, and so on...
That is why we have got the propietary Futuresplash-Macromedia-Adobe Flash leading the web to its full potencial, in place of the W3C, or Sun's Java applets, Microsoft's ActiveX or Silverlight, Adobe PDF+scripts, Google nativeclient... but Macromedia did better.
Never mind the fact that you will have to go forward about 10 years before most browsers support HTML5 in it's entirety.
Is that a good solution? it has the consequence that in order to make your new video startup site successful (on the iPhone), you have to first pay off Apple. That sounds to much like the anti-net-neutrality stuff for me.
And I can't then embed video on a blog post, or somewhere else that isn't a "special case site" for video.
...or write an app yourself that specializes in playing your video (you can register third-party apps to handle custom URL's, without any special treatment from Apple) and use it as a marketing tool to bring attention to your startup (which could use a way to set itself apart from the many other video startups).
I'm not sure where you're going with your "net-neutrality" comment, but feel free to enlighten me.
So no, the iPhone doesn't need flash and I would disable it even were it available.
Now, I couldn't care less. In fact, I'd probably prefer the iPhone didn't have Flash support. For what we do at least, rendering Flash on the iPhone would be a usability nightmare. It's not hard to detect a visitor using an iPhone and render a much friendlier version.
Flash is indeed searchable, and indexed since flashplayer 9.
It's also why they aren't supporting an open video tag. They have competitive products to it.
But hey. Flash is bad. Rarr. Objective-C good. Woot.
and it can't help that the flash plugin on macs has always been abysmal. it uses way too much cpu time. any flash website i go to makes the fans spin on my older powerbook. hardly surprising, then, that the powers that be at apple are not too crazy about it. in fact, flash pretty much sucks on all platforms except windows.