Apple's policy of banning Flash doesn't really bother me, but 3.3.1 really, really, does. Having Flash on the iPhone as a means of cross-developing apps is the most interesting way for Flash to be on the device, for me: it would mean a lot of creative and fun casual games would be more easily available for me to play.

Video, I think, is a red herring; it's easier for web sites to switch to a different, HTML5-compatible embedding scheme than it is to rewrite Flash games in Objective C.