I'm not sure about this. Or I should say I am sure this is wrong for me and I'm not sure about anyone else.
I do about 1/3 of my internet surfing on my iPhone, at least an hour or two a day and I rarely miss the Flash. In fact, I'd say I'm actually glad it's not there. Most of my major online annoyances are Flash powered.
Except perhaps for any high profile Apple device attached to the App Store (the case in question).
Almost every mainstream site has verified mobile Webkit compatibility and/or dedicated applications. The group of people who still need Flash in that scenario is small enough that leaving it out wouldn't likely have a measurable effect on adoption.
For a web product from a company that can't command as much market attention, shipping without Flash might well be a death knell. But Apple's different. The App Store is different.
The challenge comes when a business must make the majority of its revenue off those that haven't yet received the future. Still supporting IE6, aren't we?
Yeah, well the future also isn't here yet.
Flash still has much relevance for any web-surfing focused product shipping today.