YouTube, GameTrailers (via Flash), Facebook, Twitter, Gmail, Google Reader, Hulu, etc. all work fine, which tells me that the Flash isn't horrendously out-dated. Sure, it would be great to have Flash 10 and more plugins, but it's not like the PS3 browser is useless like the PSP's. I actually don't mind using the PS3 browser, whereas I use to dread it, and I still dread the PSP's.
BTW, I'm not defending Sony, just offering my thoughts on the matter. Sony's got a lot bigger fish to fry. For example: why is there only one Fast Forward / Rewind speed for audio files? Ever try skipping to the middle of the 1up Show (.mp3 format) on your PS3? No? Well, don't bother: it takes about 10 minutes...