There's still a number of factors this depends on before it becomes big.
I'm guessing how it will work is the iPhone apps will consist of an embedded (in the app) flash platform that just plays the native flash code. This will require Adobe to build a native flash player that doesn't suck
Flash devs have to be willing to get a Mac and pay Apple their $99
I'm guessing (again) that Flash based games won't be able to have the same performance as native ones. The Flash player need to be able to be fast enough for some decent games that people will be willing to pay for
The iPhone UI is quite different from kb + mouse based UI, so most things will require a bit of a rethink regarding how the user interacts