Also, consider if you will EFF critical of Flash Video DRM and Look mum, no DRM: BBC launches iPlayer on iPhone and iPod touch.
Update: John Dowdell, Ryan Stewart, and Desiree Motamedi have some details on the Flash server DRM solution ($40,000 per CPU), which can encrypt FLV and H264 video content so that it only plays in Adobe Media Player (AIR integration built in), and manages on the server-side to restrict playback to rules set by the content owner.
Update 2: CNET reports Adobe realizes SDK not enough for Flash on iPhone,
Adobe clarified its CEO's comments in an official statement on Wednesday: "Adobe has evaluated the iPhone SDK and can now start to develop a way to bring Flash Player to the iPhone. However, to bring the full capabilities of Flash to the iPhone Web-browsing experience we do need to work with Apple beyond and above what is available through the SDK and the current license around it." Key words there: "beyond and above" (I always thought it was the other way around).