That's a really strange announcement.
Adobe are talking about writing a standalone Flash Player using the iPhone SDK. That's all very well, and even exciting for standalone applications, probably meaning some sort of AIR runtime on top of the SDK.
But that still doesn't constitute a plugin for Safari on the iPhone. So what everybody has been crying out for (and what I thought would be the only reason for Apple to introduce Flash), is the ability to view/use websites that have embedded Flash in the default browser.
Richard Leggett points out that one could write a browser extension using the WebKit browser, but according to the iPhone SDK rules, writing a plugin might not be allowed anyway.

update: More clarification on the matter from
Bill Perry, Mr Mobile at Adobe.