ZeroGravitas. Apple also banged on in 2004 about how awesome PowerPC was compared to Intel. Remind me what happened 2 years later? Yes, companies do slag others off..
The smartphone market was held up for many other reasons too. It mostly came down to the fact that the mobile OS's sucked at the time. One would have also expected Android/iPhone sales to have been flat without flash support, and this is untrue (Apple have said they refuse to support Flash, and iPhones are unfortunately flying off the shelves).
If you think Flash will suddenly replace the fact that software support for ARM is limited, that the CPU's are slow (and only recently started operating at good enough speeds) and that no major OS's even support ARM (Windows, Ubuntu, redhat, many other major linux distro's) then you should perhaps list EXACTLY what you think consumers need flash for (youtube perhaps would have been one valid reason, but it has been accessible via other means since at least 2006 now).
Whilst technologies such as Flash and ActiveX do still have their uses (hopefully though HTML5 will kill flash), I doubt that the lack of flash would have influenced any manufacturers into delaying an ARM product (which would be slightly cheaper), if they were serious.
Lets face it, The major issues with the iPhone 2G was the lack of applications (and even a javascript refreshing security camera stream caused safari to crash) and on Windows Mobile it was general usability issues. Or do you think these problems would have magically disappeared because of a really-slow version of Flash?