Just my opinion here...but I think it's a pretty complicated issue all the way around.
On the H264/mp4 issues, I think that's all on Apple, since playing back those files on the current mobile Safari browser uses Quicktime and not Flash. So I don't see how any current format, codec or playback problems with video on the iPhone has anything to do with Adobe or Flash.
I've read quite a few posts in this forum that suggest the burden is all on Adobe to make Flash work in the mobile Safari browser. Well...maybe, maybe not.
Most people think it benefits both Adobe and Apple to work any issues out with Flash (and I've read many websites and blogs that suggest Adobe is working on it and Apple is cooperating).
http://www.engadget.com/2009/01/31/apple-teams-up-with-adobe-for-iphone-fla...
http://digital.venturebeat.com/2009/02/01/adobe-and-apple-working-to-bring-...
Adobe obviously provided support for the desktop Safari browser, and despite the control fears Apple may have concerning selling content and iPhone apps that they totally control, it seems it would benefit both to get at least Flash video working on the mobile version. Especially when an estimated 40 million iPhones are predicted to be in use by the end of 2009.
That said, there are compelling arguments for Apple to never support Flash, as noted in the article here:
http://www.popsci.com/gear-amp-gadgets/article/2009-06/curious-case-flash-i...
Chris Blair
Magnetic Image, Inc.
Evansville, IN
www.videomi.com