There is an even more expressive quote for Adobe to peruse: "Perhaps Adobe should focus more on creating great HTML5 tools for the future, and less on criticizing Apple for leaving the past behind."
So that's one less reason to support Flash itself on an emerging platform (iPhone is pretty mature, but it is still very young compared to desktop OSs - see the bounty of new features and UI changes coming to iPhone OS4).
I'm also concerned about their choice to introduce FXG for web use instead of using SVG. The Wikipedia article on FXG links to a blog post by Mark Anders where he contrasts the role of the format vs SVG by saying "FXG was designed as an exchange format between tools that understand graphics, like Photoshop, Illustrator, or other 3rd party ones, and tools that understand Flex and MXML." Right. So why are they now introducing it as a format for the web (via JS/canvas)?
Jobs' point talks about this; the issue is that if Flash CS5 supported what the iPhone can do today, who's to say when it will support what iPhone OS 4 can do tomorrow? Will they update Flash on Apple's schedule, or their own? Or at all?
For one example, look at GameCenter, Apple's new XBox Live-type service. Would Flash support it? Would Adobe go to the trouble of adding full support for GameCenter to their Flash runtime, so that games written in Flash could make use of that feature?
That wouldn't make any sense, because then people would have to write a different Flash app for the iPhone than for Android; either developers use GameCenter on iPhone and nothing on Android, or GameCenter on iPhone and their own solution on Android.
My suspicion is that Adobe wouldn't implement it (because it's a lot of work to just support one platform) or wouldn't implement it well (because they just don't really care), and that if it were available developers wouldn't use it (because it would only work on one platform anyway). This leads to a worsening of the overall experience, as the flood of quickly and cheaply ported Flash apps into the App Store dilutes the value that's there.
Perhaps Adobe would add GameCenter support, but that might be a new feature for CS6, which might come out (for example) August 2011, after Apple's released iPhone OS 5, with more new features Adobe hasn't had time to implement.
Developers using Flash would have a substandard environment, and would produce substandard apps, assuming they even cared at all about doing things right. That's what Apple's trying to prevent.
[Edit: typo, point 6, not point 5]
I think this is a red herring, though. Apple doesn't reject apps for not taking full advantage of the system. People can and will make Objective C apps that don't use GameCenter (or iAds, or the accelerometer/camera). If Apple was most concerned about GameCenter adoption, why not leave out the 3.3.1 change and instead mandate that all games must use GameCenter? That would guarantee Adobe would include it in Flash and then nobody -- not even the native developers -- could produce a "substandard" app.
But even if Adobe made a version of Flash that could target every aspect of the iPhone platform perfectly (maybe by open-sourcing the compiler and allowing Objective C extensions), Apple would find a way to reject it. It's not just a matter of making it easy to port things to the iPhone... it's also a matter of making it hard to port away from the iPhone. Apple currently has the majority platform, and they want to make the choice between platforms expensive, so that developers choose the iPhone first and -- as much as possible -- exclusively.