I just came across this article talking about the well known lack of flash on the iPhone. I felt it made many great points to explain why Apple wouldn't want flash on their phone despite the demand from 80% their customer base. The iPhone's user experience is one it's greatest differentiators in the market and if they feel having flash on their device would compromise the performance and battery life then who can fault them.
Here is good quote from the author :
Anyway, my point is this: Apple want to tightly control the stuff people make for the iPhone because the product’s selling point isn’t the hardware, it’s the software — the user experience. Hardware can be copied — a user experience cannot.
It's a good read and highlights some of the issues seen by many people who have tried using a technology not designed for the embedded market on their product.