It does support Flash.
Honestly, one can't say if it's better (or worse) than iPad2.
For that matter, comparing across tablets is also pretty tough.
It really depends on what you want. For example, the weight of tablets in the 10" category are pretty much the same (except for new Samsung Galaxy Tab which just just a bit lighter). If you don't like something that heavy, then 10" tablets are out (Xoom, Iconia, Transformer, TouchPad, iPad2, etc.).
For one, the TouchPad does not have a camera at the back. If you need to take pictures, then you are out of luck. And it also does not have expansion slot for additional SD/micro-SD cards. So the memory is limited to what you have on board. It's pretty much the same as the Palm Pre2 I'm playing with right now.
On the other hand, WebOS is great! True multi-tasking, and Palm (or now HP) was the first in the industry to get multi-tasking to the users back in the good old days. The card system of UI is pretty neat, and some say, better at managing apps than Android / IOS. You should try it. I find that it's much easier to handle my applications as well as some tasks like deleting messages, email etc. For example. To delete a SMS, you can just swipe, and then click delete. On Android, you need to press and hold, and then click delete. It's a lot faster to swipe than to press-hold.
Then again, when it comes to selection of apps, I guess nothing beats IOS / Android for now. But the question of what apps you need arises. When I got the Palm Pre 2, very much what is needed is all there, except for instant messaging via MSN. There's also the issue of non-availability to download paid apps from the HP AppStore in this part of the world, limiting our choices to only free apps. I'm sure this will be sorted out when TouchPad is launched (?) in this part of the world.