Of all the perceived shortcomings of the iPhone feature set, the absence of Flash functionality is second only to the lack of cut and paste in raising the ire of power users. But unlike cut and paste, which Apple has already deemed a low priority, Flash actually has a fighting chance of arriving on the iPhone soon, thanks to the hard work of Adobe engineers toiling away on a specially designed version of Flash built from the ground up to work on the iPhone.

Of course, Steve Jobs still has to give the nod for Flash to have a fighting chance of arriving on the iPhone. But assuming for the moment that Jobs recants on previous claims (the iPhone itself was denied for years) and allows Flash, iPhone and iPod touch users are in for some exciting new apps.

Video services: Apple has worked extensively with YouTube to create iPhone compatible H.264 videos, but there’s a whole world of other Flash-based video services iPhone users simply can’t use. Ranging from the creative user-generated work at Blip.tv and Vimeo all the way to the network television content at Hulu, CBS.com, and a wide range of other sites, iPhone users could see their viewing options expand dramatically once Flash is approved.

Streaming video: And that’s not even counting the live video sites allowing for real time viewing and interaction. From Stickam and Ustream to Kyte and Flixwagon, more and more sites are popping up everyday and make perfect pit-stop viewing on a mobile device. With Mac mainstays like Leo Laporte streaming all of his podcasts via live video, live streaming video is a perfect compliment to the media already stored on the phone.

Games: There are a host terrible Flash games littering the Internet, but amongst the duds there are also a few addictive gems like Desktop Tower Defense, along with arcade classics of yesteryear delivered straight through the browser. Sure, you can download games to the phone, but you can’t log into Habbo Hotel or even keep your kids quiet with a quick visit to Club Penguin.

Design: Though Flash is often abused and relegated to fancy but pointless splash pages, many designers, like Flash maverick Joshua Davis, also use the software to explore new ways to interact and express their art through a digital medium. Combine their creativity with iPhone’s always-on, location aware feature set and the device could be the catalyst for new forms of art. Given that Apple is such a well-loved brand amongst designers and other creatives, keeping Flash off the iPhone seems almost criminal  for this reason alone.

Of course, most if not all of the features Flash brings to the iPhone, like streaming video and games, work around Apple’s carefully crafted iTunes ecosystem. Flash on the iPhone isn’t a question of “can’t”, it’s a matter of “won’t.” Until Steve says “we will.”

Not convinced? Check out our reasons why Flash will suck on the iPhone.