According to ZDNet, Adobe will cease development of mobile Flash and focus their resources on HTML5. The following was leaked to ZDNet by sources close to Adobe:

Our future work with Flash on mobile devices will be focused on enabling Flash developers to package native apps with Adobe AIR for all the major app stores. We will no longer adapt Flash Player for mobile devices to new browser, OS version or device configurations. Some of our source code licensees may opt to continue working on and releasing their own implementations. We will continue to support the current Android and PlayBook configurations with critical bug fixes and security updates.

Considering Adobe demoed Wallaby—their tool to convert Flash to HTML5—last October, I think it was apparent to some on the inside that Flash’s days are numbered. Killing off mobile Flash is just the first step towards ending Flash as a browser plugin, while moving to support native apps and HTML5.

Update: Adobe has officially announced the end of mobile Flash on their blog.