Basically preforms really well, except games run choppy. However it never seems to affect the phone, so scrolling and zooming are smooth, response time is the same. Games are somewhat unplayable at this point tho, only the lower end games can be played well. But Adobe did a great job not letting it affect the system, I noticed no performance drop when using flash even while running choppy games. Although this also could be great cpu management by android.
Web-based apps work great. For example I wanted to know how fast my internet connection is, and used http://www.speedtest.net/ which works flawless on my phone. I got around 2Mb/s DL and 0.4Mb/s with two bars 3G. Told me it was average for my ISP (Verizon). Cool.
This is a good example of an cross platform flash app (speedtest) as its already used on desktops and soon multiple mobile platforms. Basically a flash developer can make an App once and have it available to most all mobile devices + any other computer running flash.
Another advantage is that I can play any embedded video, whether it be from youtube or anywhere right from my browser. This has helped me a lot.
Overall Adobe did a great job, if you don't have flash yet you may not believe that they were able to implement it so well, but once you really try it out you'll see how smooth it runs. And I only have 2.1 so far, Android 2.2 is supposed to increase my performance by like 430% or something crazy.
I was very impressed. When I got flash about a month ago it completely changed the way I use my mobile device, it becomes closer to being a substation for a full blown computer every month. I think Apple is secretly refining it, and going to release is as a big feature of iOS 4.1 with really cool add features, that would be very Apple-like.