Because Flash takes external (unsigned, untested by Apple) code and executes it locally. You will find that no app can do this in any manner.
In fact, you can't even write a web browser with your own rendering engine, because that executes code (html, css, javascript) from external sources. All browsers on the iPad use the built-in rendering engine, with the exception of Opera which renders the pages beforehand on their servers and then sends you a processed document.
Basically executing external code is a huge security risk. If you notice almost every time some sort of 'hack' for the Mac gets publicity it's accessing the machine through Flash, Java, or Javascript.
If Flash does end up in iOS it will be with official approval, testing, and I'm sure Apple will keep a close eye on it for security vulnerabilities, as they do their own version of the Webkit rendering engine.