The real problem that I have with it is that they actively block alternative means of installing applications, making their store an all-on-nothing affair. You either use the apps that Apple tells you that you should be using or you don't use them. If I have to utilize a technical solution to fix a policy problem then the product is inherently flawed. If I feel like using Flash to slow my device to a crawl and kill my battery (which I can speak to being bullshit arguments firsthand having used Flash on my Droid for a while now) then I'm going to kick my device's ass playing Flash games. THAT'S magical.
That said, Android has the opposite issue with the uncontrolled state of the Market actively dissuading developers and users, but given the choice I'll go with openness without question. I would prefer that Google put more restrictions on the official Market in order to provide more incentive to developers and users to adopt Android while still allowing alternative software repositories to exist. If someone wants to release an Android application that either violates Market terms, such as a hardcore pornography app, or that only runs in unsupported configurations, like rooted devices, then they are still perfectly capable of doing so and it really isn't a big deal for people to install those apps.