Ggp mentioned battery life explicitly, that's why I addressed that.
I'm probably one of the largest flash haters on the planet, it took me all of 7 years to convert our video to flash, because I simply can't stand it that for basic functionality like that we need a plug-in.
That said, that particular plug in is now so widespread that even people that can't stand it also can't really get around it.
HTML5 is not here yet, flash is here today. So, for live content, where downloading and converting is not possible this move by apple limits their users uses of the web.
The best way imo would be to show side-by-side the same functionality, have a period of cross-over, dual implementation and to deprecate flash.
To simply not support it is not going to convince any developers to make HTML5 content, it's simply going to frustrate a lot of end users.
I just got an angry email from some guy ranting at me that since I won't support the iphone he will no longer be frequenting my site. I sympathize, my budget is limited, both in time as well as in funds so he'll have to go his way.
I don't like it when choices are forced, choices ought to be free. HTML5 video capable deployment still sucks, flash is, as annoying as it is, at this moment in time the only viable way of getting good coverage on the majority of platforms.
Battery life decisions should be up to the user, not up to the manufacturer. If you need or want to see that video and there is no very good technical reason why you can't (and shortening battery life is not a good enough reason, if that were a prime decision factor the display in the iPad would have been a more economical model) then you should simply be able to.