Of course, the "newest version of Windows Phone" is technically 6.5.3 -- a WinMo update recently announced (but hasn't shipped) and presumably still works with Flash 10.1 beta (but isn't guaranteed). And since we can't find the Adobe statement on any of its usual press channels, we can't say for sure this quote is related to Windows Mobile 7. Still, we don't doubt the accuracy of Phone Scoop so don't get your hopes up for Flash in the initial builds of"Microsoft and Adobe are working closely together. While the newest version of Windows Phone won't support Flash at initial availability, both companies are working to include a browser plug-in for the full Flash player in future versions of Windows Phone. More details will be shared at Microsoft MIX next month."
Update: Sorry kids, we have independent confirmation: Windows Phone 7 will not support Flash at initial launch.
Microsoft Windows Phone 8.1