I can think of a good reason.
Apple does not want to support any issues related to Flash on the iPhone including privacy, stability, security, and efficiency. They also wish to promote web standards over proprietary solutions controlled by a single company for web content. They don't want to support both options because it will slow down the adoption of the emerging standards.
You have seen these reasons before, and they are good reasons. Even if you don't agree with them.
Flash Player 10.1 is the most significant release of Flash Player since it introduced video. Do you really think it would include all of the current improvements if Apple didn't refuse to include previous versions (and Lite versions) in the iPhone?
I've been blocking Flash longer than I've had a Mac. Basically, since I found out about LSOs (Flash supercookies) that ignored my browsers security and privacy settings and were maintained indefinitely. And that Flash maintains a global list of websites that you have visited that use Flash. And that the way that Adobe expects you to control this list is through a random website that is not accessible through the Flash Player. As of 10.0, the situation is still the same.