For now Google is making available an initial integration of Flash Player with Chrome in the developer channel. New versions of the plug-in will install seamlessly through the auto-update system and Chrome's sandbox will be extended to web pages with Flash content in the future. On the other hand, the integration could potentially leave many Chrome users with an insecure version of Flash for some time if Adobe drags its feet patching a known vulnerability. You can easily disable the built-in Flash Player if you like, though.
The announcement comes as a number of media content providers, including CBS and The New York Times, are looking to provide alternative HTML5-based video content to support non-Flash devices such as the iPad.