Since the FBI thinks that Apple can decrypt the phone, why don't they just give the phone to Apple, let Apple do whatever magic it is they do, then put just the data on a flash drive and give that to the FBI?

For all devices running iOS 8.0 and later versions, Apple will not perform iOS data extractions as data extraction tools are no longer effective. The files to be extracted are protected by an encryption key that is tied to the user’s passcode, which Apple does not possess.

For iOS devices running iOS versions earlier than iOS 8.0, upon receipt of a valid search warrant issued upon a showing of probable cause, Apple can extract certain categories of active data from passcode locked iOS devices. Specifically, the user generated active files on an iOS device that are contained in Apple’s native apps and for which the data is not encrypted using the passcode (“user generated active files”), can be extracted and provided to law enforcement on external media. Apple can perform this data extraction process on iOS devices running iOS 4 through iOS 7. Please note the only categories of user generated active files that can be provided to law enforcement, pursuant to a valid search warrant, are: SMS, iMessage, MMS, photos, videos, contacts, audio recording, and call history. Apple cannot provide: email, calendar entries, or any third-party app data.