The only way Apple can pretend Flash doesn't exist, is if the world stops using Flash. Plenty of hotels, airlines, restaurants and more all use Flash.
I don't care that I can't access Hulu on my iPhone - I do care that I constantly run into sites that just don't work. There is a reason Google is bringing Flash to Android - there is demand for it.
Though I do understand Steve Jobs - Flash usually sucks, and it is indeed a hog, but you can't pretend it doesn't matter and stick your fingers in your ears.
Also, there is clearly more to this than just standards - Apple is obviously interested in preventing Flash from becoming a development platform.