So some idiot of a flash programmer goes ranting about how the touch-screen doesn't support all of his mouse-friendly techniques for simulating button-pressing with a mouse (hovers, etc) rather than realizing the whole point of a touchscreen interface is to not need to use those 35 year old hacks in the first place, and therefore says flash on a touch-screen should never happen. In this, he totally misses the real issue with the ipad not supporting flash.
I say, the problem with not providing flash on touch devices has nothing to do with all of the "flash programming" and "navigation" issues around the flashy hovers/mouseovers we're all used to associating with flash. a gui is a gui, and if current flash developers think the touch-screen is a step backwards, they are the ones with the closed minds. things change with technology, so adapt or be left behind, but quit blaming the new technology (even if it really is more than 25 years old) for your own lack of imagination.
on the key problem, the issue is simple: flash video, as served by youtube, is the de facto standard for open video linking and embedding on the web.
remove flash support (even with youtube adding apple's proprietary format to a percentage of its content), and you are explicitly removing support for the majority of the video on the web, especially as linked by blogs and facebook.
apple is intentionally crippling their device for the web in order to drive more users to iTunes for video content. while that works to a point for the damned phones, for a larger device trying to find its raison d'etre as a potential replacement for netbooks, telling your potential userbase that the $200 netbook does more (and for free and with real freedom) than your $500 tablet with its appstore costs and restrictions, is NOT a good selling point.
apple is selling itself as a device for commercial content makers, but at the cost of not realizing you can't sell a device to the general public today if word gets out it is a bane to social networking. without full youtube and facebook video support (and yet, costing more), it is exactly that.