Lee Brimelow has a great video about creating apps for the iPhone with CS5. This is is just a preliminary video showing a prerelease version of Flash CS5. The process may change in the final release, but it gives a good idea of what is going on and what kind of performance you can expect.
Sounds like it costs $99 per year to become an iPhone developer through Apple. You’ll have to pony up if you are serious about developing iPhone apps.
Here’s a little on someone’s experience creating apps for the iPhone: