1. It is not illegal and most likely won't mess up your iPhone. However, it will void your warranty. And yes, you can restore it to factory settings with iTunes, but your warranty will still be dead.
2. So far, the only emulators are NES and GBA, along with all of the other emulators that were made for GBA (e.g. someone made an SNES emulator for GBA; you can use the GBA emulator to play the SNES emulator). However, I think when gpsPhone (the GBA emu) is all worked out, the coder will move on to other emulators; hopefully Sega Genesis :-)
3. No, they don't. I have almost 20 applications on mine (well, I have an iPod touch, but it works exactly the same) and iTunes tells me that I have used up 77.8 MB of "Other" stuff, which is a very small sliver of the capacity bar. That also includes all of the programs that came on the iPhone, but not the iPod touch (Mail, Maps, Notes, Weather) that I put on it as well (yes, you can do that!).
4. I am with you an this one. It should have Flash. I talked to one guy at the Apple store when the iPhone just recently came out and he was like "Well, there is a lot of time for updates, so you never know." I would imagine that it is coming because otherwise, Apple wouldn't have made the cute little "missing plug-in LEGO block" icon when you go to a page with a Flash movie on it.
Go to Settings, then go to About. If your Software version is 1.1.1, simply go to Safari (on your iPhone), and go to www.jailbreakme.com. Scroll down and tap "Install AppSnapp." Wait a while, and when the Springboard (main menu) reloads, scroll to unlock, then you should have an icon called Installer. This is where you will be getting all of your tasty applications from.
If your version is 1.1.2, you have to downgrade first. I don't know how to do this, but there should be some good instructions here: http://apple.dcemu.co.uk/instruction...1-1-78964.html
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