You'll never see Flash on an iPhone. The lack of it is not due to processor speed. It's due to the poor user experience represented by Flash on a touchscreen, and also due to pure commercial factors.
It is sad and I agree with you.
It is also obviously a flawed argument. My girlfriend has an optimus 2x; the phone eats up flash for breakfast. I can watch all those random comedy clips online without a problem at all. It also gives me to option to disable flash should I wish to do so.
With this in mind, Apple's argument is pigheaded and highly irksome. They have made a great phone and have wonderful software; why not offer the complete web experience other phones offer?