Obviously, this puts Flash developers in a (slightly) deeper fix than they were before the iPhone 4.0 announcement, but to me, it raises a more interesting issue: Where are the graphical HTML5 development tools? You can use any text editor to code HTML5, and Adobe's Dreamweaver will do a fine job, but how do you create the sophisticated interactive applications that we've come to expect from Flash? It's extremely unlikely that Adobe is going to extend Dreamweaver to compete with Flash, and Microsoft's web development tools are focused on Silverlight for video and interactivity, not HTML5.
Where are the HTML5 graphical application tools going to come from? At this point, I don't know. There's a real market opportunity there. The first company with a HTML5 interactive design tool that feels familiar to Flash developers will hit a gold mine.