Bloomberg reported this weekend that Adobe engineers are working diligently on getting Flash down to an acceptable level of power usage and performance to work on the iPhone/iPod touch architecture.  The bad news?  Don't expect this technology to become available in the first half of 2009.  According to Adobe's press release on the matter:

The joint technology optimization is targeted for the ARMv6 and ARMv7architectures used in the ARM11™ family and the Cortex™-A series of processors and is expected to be available in the second half of 2009. The partnership stems from the Open Screen Project, a broad Adobe sponsored initiative of industry leaders - including ARM - to deliver a consistent runtime environment across multiple devices by taking advantage of Adobe Flash Player and, in the future, Adobe AIR. The initiative is set to address the challenges of Web browsing on a broad range of screens, and remove the barriers to publish content and applications seamlessly across screens. For more information, visit www.openscreenproject.org .

By the second half of 2009, the iPhone 3.0 Operating System will be around.  So will new iPhone ARM Cortex A(8?) series hardware that will likely be able to handle the intensive CPU requirements that Flash takes to perform well.  Will Apple back port it to older hardware?  Perhaps but it is unclear how it will perform.