I think it will be interesting to see what Apple does here.
Apple needs to support technology like that in the future if it is to stay competitive. At the moment it appears to be counting on HTML5 features to become prominent.
But most websites use Flash (although more and more for video only, as most websites are returning to HTML, thankfully!) and people are genetically reluctant to embrace change.
Adobe, on the other hand, needs to keep Flash alive for its own bottom line. But it is obvious that Apple is uncomfortable with the power that yielding on this would bring to Adobe.
Problem is, how long will it be before the majority of Flash-based components in websites (mainly video) convert to another format, if ever?
Apple cannot afford to have the only smartphone not to be able to watch Flash videos on the web. Will it eventually buckle (like on USB 2.0 and FireWire) or use this opportunity to reduce web reliance on Flash in general?