The UI for the LG Prada is built entirely on it, and in an interview with an iPhone dev at Apple, it was confirmed that the iPhone will soon support Flash too (I lost the damn link though). It allows for rich interfaces and doesnt necessitate the installation of an on-deck application since it is loaded from the browser.
I agree with your notes on Java ME... Sun really didnt have a choice though in the early days, if they were to gain adoption by the handset manufacturers. They had to allow lots of flexibility across implementations. The good news is that modern Java ME phones usually support a wide range of libraries and the manufacturers are much better about being compliant.