Flash is of the utmost importance to me. Two things: Hulu and flash games.
The iPhone games put flash games to shame. Hulu is not gonna cut it on a mobile device, you know it. Look at the resources you need to play 720p on a laptop or netbook. Then look at what will happen to an iPhone or Droid or Nexus One running it. Maybe they'll give us an app.
I believe flash is highly overrated. While it would be nice, it's not a huge killer for it to not be on the iPhone. I understand many people don't like Apple putting these restrictions on people, but in the end it's not like you're gonna gain much. And watching video on a 320x480 screen? Please. If you're really that desperate for 2 hours of battery life to watch some Hulu HD video, just wait till you get to a laptop at least.
Furthermore, you're just not going to get a great flash experience ANYWAY on a mobile view tiny screen. It's nice to have, but just not that important...
Seeing as there are many major sites that are flash only, I say Flash is an important part of web browsing. Also they did a test of Flash 10.1 on the Nexus One and it had a minimal impact on battery life. We all know Apple hates Flash cus you can just look at their desktop machines and all that fiasco they've had to know the only reason Apple isn't using Flash is cus the hate they have for each other.
http://www.engadget.com/2010/02/24/flash-10-1-might-not-be-a-battery-hog-on-android/
Major websites use flash only? You mean like youtube and Hulu, and sites designed for you to WATCH video? That's pretty much it. Flash navigations are heavily frowned upon now in website designs, and heavily animated websites are ignored. Why do you think people tout NoScript so much on FireFox? Sure I don't use it because I feel like most flash is unintrusive (at least with the sites I visit), so I'd rather just leave it on, but if people can do away with flash on desktop sites, then I'm sure you can do without it on Mobile sites.