I agree. If you spend the time to read more about this issue, you'll soon find that there are issues that haven't been too clear. For instance, the mobile version of Flash really isn't that compact - it requires more resources, and the version for the iPhone was only available recently. From what I've read, it seems Adobe has been quite slow to create a version that works properly for the iPhone.
As this open letter from Steve references, there is definitely some bad karma between these companies. Adobe created all kinds of a mess when OS X was released as they wouldn't commit to porting their graphic applications to the new OS in a timely manner. By their inaction, Apple went ahead and bought and then improved upon an editing suite which is now known as Final Cut, and that application competes with Adobe Premier and others... Adobe has not been a friendly Mac developer in the last 10 years, whereas they were among the best prior to then. It's really a shame, but to understand the situation re flash, you have to see the entire history here. It's not as simple as Apple trying to exclude them for no good reason. And don't forget that Adobe has a good marketing/pr firm too, so don't necessary believe everything either company says at this point. It takes time to understand the true situation.