Flash could become part of set top boxes as it is a very good substitute to HTML or other user interface presentation layer. In France, Free makes YouTube-like channel available to their IP TV subscriber that allows subscriber to upload their home-made videos to a specific Free channel, and it is all Flash based.
Flash has a video codec that can be used in IP TV offering. However, Flash was not originally designed for video so it requires some work to do this properly (Bluestreak does a good job at it). And Flash is proprietary so that there are interoperability and scalability issues if used in a video environment that is very non-heterogeneous such as the mobile video world.
IP TV vendors that have software based architecture will find it easier to add Flash as compared to the ones that have ASIC-based platform. Envivio and Samsung already have Flash available in their IP TV solutions. The convergence occurring between portals (Google, Yahoo, MSN) and traditional telcos will also push the Flash option.