I think Apple was playing a game of chicken with Adobe over the flash player licensing fee. Adobe wants a pretty penny for the player on embedded devices.
[Dramatic reenactment]
ADOBE: So, you want the flash player on your new phone, eh?
STEVE: Yep.
ADOBE: OK, that'll be 5% of retail sales.
STEVE: Ah, no
ADOBE: OK, 2.5%, bottom line.
STEVE: Look, we can release this device without the Flash player at all.
ADOBE: No way, we rule dynamic content on the web--if you want to give people the "real web" you've got to play ball.
STEVE [to the public]: Develop using Web 2.0, Flash Player will suck your battery so it's really better that you don't have FP. [applies RDF effect].
PUBLIC: [Buys 100,000 x ? phones in the first week]
ADOBE: Ah, Steve? Steve? Are you there?
STEVE: Hmm, oh it's you. Can I help you with something?
ADOBE: Ah, how's about 5$/unit.
STEVE [Applying RDF]: you think it would be strategic to offer the Flash Player for free on the iPhone.
ADOBE: Ah... We've decided it would be strategic to offer the player for free on iPhones... [blinks a few times, regains focus] But you've got to pay for the development and maintenance.
STEVE: Already done.