Given Steve Job's most recent letter concerning Flash on the iPhone, I'd like to broaden the debate to native plugins on the iPhone. Mr. Jobs provides a host of reasons why Flash is not permitted and it reminds me largely of his previous argument around needing native applications on the iPhone (remember that they encouraged us to create nice web apps instead at first; then there was the whole multi-tasking debate..).
Let's take a concrete example of when you do require a plugin: Google Earth. Google Earth exists as a web plugin as well as a standalone executable. There are times when you'd like to embed Google Earth in a web page given its 3D capabilities; that's why the plugin exists of course!
Another example is with our own web plugin; it is something similar to Google Earth and has advanced capabilities with regards to map projections. We rely on third party C++ libraries and we utilise OpenGL.
If I thought about it I'm sure there are other applications with dependencies such that you need to go native with a web plugin; not often perhaps, but we need to leave the native plugin door open for these situations.
I think Mr. Jobs has his reasons for not supporting Flash, but that's a separate consideration to supporting native web plugins.
In the end, I think that Adobe and Apple will come to an agreement and Adobe will release a well written and performant Flash plugin. The rest of us will then be able to install and write plugins for the iPhone when they are required.