I've never really liked flash that much. Sure YouTube and Vimeo rely on it (although Youtube works with the iPhone), and a few sites have comic animations made in flash, and a few companies still insist on using flash for stuff like e-learning. But flash websites are horrid, and I make a point of not using them - always have, always will. And as Becky says, nobody in their right mind would set up a new site using flash, would they, as it's old fashioned and out of fashion.
So although miss being able to access Vimeo and silly animation sites, overall I don't miss flash itself. Vimeo are converting to alternative video formats anyway, and any funny vids are on Youtube now...
Yes, there are some limitations to the iPhone that are 'silly'. And yes, some of the hardware isn't as good as the opposition in terms of raw numbers. But the competition can't out do the whole experience. Just like no single personal music player has managed to be as nice to use as the original iPod, let alone future versions (in my opinion - and I never owned an iPod, my iPhone is my first ever Apple product, and for now that's enough).