It cracks me up that portable device manfacturers are devoting resources to putting Flash playback in their firmware.iRiver - Clix
Let's not get confused with Flash playback on the Sony PSP. The reason that the PSP benefits from Flash playback is because the PSP has built in WiFi networking and a web browser.
OK, let's see. Would you rather spend $199 on a PSP and get a huge screen, a software ecosystem for games, ultra-high quality movie playback, web access, and later, add as many $60 1GB (this year, $30 next year) memory sticks (expanding with your needs). Or would you rather get an iRiver Clix?
Right now, there are only two players in this market. Sony and Apple. Apple succeeds because iTunes makes it easy to acquire 'content'. Sony succeeds because it's hardware is basically jaw-dropping amazing. Sony's software dept is no slouch either. Their media software division was formerly "Sonic Foundry" and they produce excellent software.
Forget about flash. It's for flashy, content-free, web sites. For collecting video content in QCIF or QVGA (352x240, 352x288, 320x240), use MPEG-1 or MPEG-4. Like JPEG, these latter file formats will be good "forever".