Adobe was once a seriously great company (Jobs apparently talked wistfully about those days in his Q&A), which together with Apple pretty much created desktop publishing and everything that goes with it (like Photoshop, Illustrator, PostScript, PDF, PageMaker, InDesign). The world would be a much worse place without it.
It started going off the rails after founders Geschke and Warnock left but after the Macromedia deal went through in 2005 the lunacy just took off. The only bright spot since then has been Lightroom -- sorry Adobe Photoshop Lightroom -- and even that was a skunkworks project that they had effectively killed until Apple previewed Aperture. All the rest has been just hicky and nasty, and Flash has become endemic (Flash for Photoshop palettes? Really?)
It feels to me as though, rather than being acquired, Macromedia has actually overrun Adobe, to its serious detriment. There's lots of precedent for this in tech deals like this: there were big political struggles in Apple between the incoming NeXT people and the existing Apple people (those struggles emerged as Carbon vs Cocoa, and you can guess who won).
I don't have any insider information on this, but it's interesting to note that all this recent childish posturing and blow-harding about Flash has come from former Macromedia people (this link, the inane blue lego image, everything jdowdell writes). Meanwhile, old Adobe hands like John Nack have been pointing out that, actually, the company's future lies in making great communication tools, not in making sure Flash "wins" a pointless fight.