Take a look at Edge ( http://labs.adobe.com/technologies/edge/ ) if you want to see the animation code that is generated. It will give you an idea how text and other elements are in HTML and readable by Google. When in Flash the content is embeded in the file so Google sees nothing. Look for CSS menus and compare it to the code generated by a Flash menu. Those are the two best examples about SEO.
When in Flash the content is embeded in the file so Google sees nothing.
This is a common misconception. Google has indexed Flash content (SWF) since 2008 and accurately spiders all text content, links and menu items within the Flash files. As with most things on the web these days, a bit of forward planning and understanding will help your results, but it can be used.
I built 2 Flash sites around 5 years ago which are still around today and Google indexes every page/section with the text content showing in the Google results page. It also tells me the URL for each page and the title. Even though I am now re-creating one of the sites in HTML5, I am not expecting a massive, life-changing jump in page rank due to the change in technology, but I do expect some improvement. There are definitely benefits to a non-flash site and SEO but the margin of difference will be small with small static sites. If you have a content managed site with blog etc, the difference will be much larger.
The sole reason I would not use Flash nowadays is down to Apple. As the percentage of people accessing the web from mobile devices increases, including Flash content in your website that can't be accessed by iPad, iPhone, iPod is just not clever for future planning. If you can avoid it, do. But it's not dead..... yet!