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Apples reason for not allowing Flash is just so they can continue control the iPhone (and now iPad) software availability.
If they supported Flash then anyone could write Flash applications without Apples consent. Everything else is marketing FUD to make it easier for mac-fanboys to continue deluding themselves that Apple doesn't actually hold their own customers in contempt.
Interviewer: Is there anything you don't like? Bjarne Stroustrup: Marketing hype as a substitute for technical argument. Thoughtless adherence to dogma. Pride in ignorance.