Uh, because they blow?
There's more to it than that, of course:
And here we have the real issue. Sure, the iPhone could run Flash, but — particularly given the already unoptimized state of Flash on OS X — it would probably have to run some stripped-down, crappier version of Flash.
For the full story behind the various procs and cons, check out the full article, and also take a look at the Macalope's weekly column for the latest Windows Mobile CES news -- which makes TiPb wonder if Ballmer is picking his code names from Lady Marmalade these days...