Wired magazine app on the app store uses a modified version of Flash and is getting great reviews.
Adobe is not stupid, as mellotron says they would lose millions if they dropped their Mac products. The web is not all about Flash!
As for playing DVD's on the IPad, that's so old tech! You can...
I can see it as a device for non techie computer people who just want to surf the web, watch a movie, play a game, listen to music,read a book, send an email in a very simplistic fashion.