Now, before you get too excited: you still won't be able to use Flash 10 on the iPhone and iPod Touch (read: no access to web-based Flash programs). What you will be able to enjoy, though, are applications built in Flash and ported to the App Store using Flash Professional CS5. In a video demonstration showing off a few third-party developed games, the apps come across as far more responsive and slick than your average iPhone/Touch content.
In short — and in Adobe's own words — developers can now "repackage existing web content as applications for iPhone if they choose to do so."
If you're interested in trying your hand at developing Flash-based apps for the iPhone or iPod Touch using Flash Pro CS5, there's a beta you can sign up for.
From Adobe Labs:
The new support for iPhone applications in the Flash Platform tooling will not allow iPhone users to browse web content built with Flash technology on iPhone, but it may allow developers to repackage existing web content as applications for iPhone if they choose to do so.Adobe Labs, via TechCrunch
Flash Player uses a just-in-time compiler and virtual machine within a browser plug-in to play back content on websites. Those technologies are not allowed on the iPhone at this time, so a Flash Player for iPhone is not being made available today.
Flash Professional CS5 will enable developers to build applications for iPhone that are installed as native applications. Users will be able to access the apps after downloading them from Apple's App Store and installing them on iPhone or iPod Touch.