Apple simply put their foot down and said they are no longer waiting for Adobe to get their act in gear. Ultimately if Flash dies off due to it, it's because Adobe failed to deliver on their promises. Safari on iOS supports plugins and has since day 1 back in summer 2007. Apple sat waiting on Adobe to deliver Flash for mobiles for nearly 3 years before moving on. To put in perspective how long 3 years is in the mobile space, this was Android in late 2007:

Google mobilized quickly and changed the direction of their platform before it even shipped, and is now looking forward to version 3.0. Adobe in that time well, just now delivered a kinda working Flash solution.

Not only is Apple moving on, so is most of the web. There are plenty of free and cheep games on the iOS platform, more and more appearing on Android, and I'm sure a number will appear on Windows Phone 7, all without Flash. Nearly every video I want to watch on the web works fine on my iPad, either right in Safari, or from a a dedicated app providing an even better experience then a website.