As someone who was given early access to the native iPhone application export in Flash CS5, I hope I can provide a little bit of information about it. For the record, one of my games created with this technology was featured at the Adobe MAX 2009 conference, so it is publicly known that I've worked with it, and I'm not breaking NDA by talking about my experiences as long as I stick to what Adobe has already disclosed.
First, let me make one important point. In many cases, Flash may not be the right technology for what you want to build. For instance, 3D games and applications that should use native UIKit controls are better off if they're developed with with Objective-C or other languages that have access to full native capabilities and libraries of the device. For the right type of experience, and the properly-skilled developer, Flash may be a good choice.
As one should expect, there is a big difference in CPU capabilities between desktop and mobile. Thankfully, in the conversion process, ActionScript 3 goes through an LLVM-powered compiler to be optimized ahead of time as native ARM assembly for the iPhone. As a result, code performance doesn't suffer too greatly, if at all. The majority of my code from existing projects I'm porting to mobile remains unchanged. Mainly, I have to redesign visual content to fit on the device and focus on bottlenecks in Flash's software renderer. Even on the desktop, the renderer is probably the main wall developers run into when pushing the capabilities of Flash Player.
Thankfully, one thing Adobe engineers are finally exploring is hardware acceleration (actually, video is accelerated in the desktop plugin, but only in certain specific situations). For example, as long as a display object stays static, it can be marked to be cached as a surface and drawn to the screen very fast because it is kept in graphics memory. Other interesting optimizations can be made to speed up visual content too, like using bitmaps to replace display objects that have filters (drop shadows, glows, and other stuff like that). This sort of thing can improve performance on the desktop too, but lazy developers don't always do what's best when it looks "good enough" on their own machines. Some of my colleagues find this sort of workflow change unacceptable, but I consider it both a wakeup call about how lazy some of us have become and an obvious requirement of moving to a more limited platform.