I'd guess they omitted Flash because the iPhone is too low-powered for it to look good; the iPhone needs optimized native apps. Since "looking good" is a huge part of the iPhone experience, it makes (painful) sense to drop that feature. Same for Java.
It might sound like I'm criticizing the iPhone, but I'm not: it's how Apple managed to create a cool experience for users in an incredibly compact size (they are tiny.)
The result is that when Moore's law does enable reasonable processing power in a device that small, Apple will be in the best position to exploit it, in market position, in design tradeoffs, and in engineering knowhow.