Two main parties have closed off Flash on the iOS platform. Neither is Apple (their role is an important but distant third):
1. Adobe closed it off by not having Flash working—working well—on mobile platforms, or even on the Mac itself, for ages. And even today, when some tiny fragment of Android users now have Flash, it’s not working all that well. Working well, to me, means consistently well, not just “sometimes.”
2. Reality closed it off because fingers are not mice, and fingers don’t have rollovers. New Flash content can be developed that doesn’t need the things a touchscreen lacks. But reality is currently full of Flash content that just isn’t much good on a touchscreen, and cannot be without the developers of that content re-doing it. (Flash is much more than video. It’s games and navigation menus, etc., ...and yes, ads, too)
Apple could go ahead and support Flash despite those major problems, and Apple’s users would blame Apple for the resulting poor experience. It’s not like Apple has any way out that dodges complaints from someone.
I know how rarely the lack of Flash bothers me on my iPhone. And I know how often the PRESENCE of Flash would bother me as it slowed down my browsing, drained my battery, and in the end, often presented content that simply didn’t work right anyway!
As a web developer, I’d love to have my Flash sites working on iPhone. But what I want is Flash working consistently WELL, not Flash as a marketing bullet point and PR topic. And that’s something that doesn’t exist on any mobile platform yet. How can Apple change that? They can’t. Only Adobe—and the passage of time—can change that. But I suspect that before that ever happens, non-Flash tools will emerge instead. Maybe from Adobe! I hope they’re great when they arrive.