"At the Flash On The Beach (FOTB) conference in Brighton, Sr. Director of Engineering at Adobe Systems Paul Betlem, confirmed that Adobe is indeed developing a Flash Player for the iPhone. However, Apple calls the shots as to when it'll be available."
What's that saying about the fat lady? I'd draw precisely zero conclusions from this. The fact that Adobe have someone writing some code for the iPhone doesn't mean that Apple will permit the Flash player to work on the iPhone or that they'll do any more than sandbox it within the browser. The latter would let them boast Flash support (and deliver a good full-web experience) without fragmenting iPhone development further (into native app/web app/Flash).