It's an edge case. No one is going to be deploying a Hello World App to the App Store. Try comparing code size for similar applications and then we might have something to talk about. Otherwise, this is poor argument.
MTV's South Park Avatar Creator is 9.3MB. Three other avatar creators that seemed similar in the appstore averaged about 6.5MB. Not a very scientific comparison, admittedly.
I wouldn't be surprised that they're bigger as it's generated code. Still, it doesn't seem to me like flash apps are going to eat up all your available app storage space.
Again, the Hello World App is entirely irrelevant -- the question is whether a real world Flash iPhone app will be substantially larger than a native iPhone app that does basically the same thing.
To clarify the point with an example, a one line hello world python script when compiled down to an executable on Windows takes about 7 mb of space because of the runtime payload. But, a more complex 1000 line script wouldn't take up much more space - maybe 7.2 mb