Sadly, this isn't the only article about this that screws it up by leaving other important information out..

For one thing, the Blackberry won't be getting it either. In fact, Adobe has said that the Blackberry is much further behind in development than is the iPhone version.

In addition, there is that quote from an article on the new Win Mobile 6.5 and a new phone:

" In the demo I saw, Flash was very sluggish, potentially backing up Apple’s contention that Flash is too inefficient for small phone processors."

http://bits.blogs.nytimes.com/2009/02/16/a-look-at-the-new-windows-mobile/

This article is written by a well known Win Mobile advocate, so the article is interesting for what he says both for and against.

I'd suspect it is because strictly speaking, the Flash player is a virtual machine, and therefore it conflicts with the iPhone SDK license. That's the same reason there is no Java runtime for the iPhone.