Apple's developer agreement forces developers to write high-quality applications that look and feel like Apple software. After all, Apple doesn't want the iPad to look like any other tablet, or the iPhone to look like any other phone, and it certainly doesn't want its customers to believe that its own products perform poorly as a result of third-party software or tools.
It seems unlikely that it would have come to this were it not for Adobe's decision to proceed with Flash Packager despite Apple's lack of support for Flash on the iPhone OS. Apple owns the hardware, the most critical software, and the storefront: one way or another, every software company has to bend to the whims of the platform.
Which raises the question, did Adobe expect this to play out any other way? Even media giant Condé Nast saw the writing on the wall: Although it has been developing a Flash Packager version of Wired for iPad, the evident friction between Apple and Adobe made it hedge its bets and develop a version using Apple's methods as well.
Adobe is a tools company, so it has to respect the platform -- instead, it decided to work against Apple's interests. For better or for worse, Apple now appears to have totally locked Flash out of the iPhone. As a result, developers may not see a viable alternative to Xcode or HTML5 for a very, very long time.