There is a setting to make Flash only load when you click on it (like flashblock), so ads really aren't a concern.
I just installed Froyo and Flash, and after trying hulu and one random flash game, I am not impressed. Hulu didn't work, and the flash game didn't work because it expects keyboard controls. Also, when you touch inside the flash applet, a mouse cursor flickers into visibility for a split second. Really ghetto. And like always, flash steals your input focus, so if you want to scroll the page you have to deliberately touch something that's not the flash applet.
Overall I'm impressed by this PR gimmick by Google, and even more confident (and glad!) that Flash is very slowly going the way of the dodo.