I think it's needed. While I'd prefer to not use Flash, and will never use it on any site I create, there is content that can only be accessed by using it. Some of it is videos, some games, and others menus that make navigating a site impossible. And just because Flash menus are completely useless doesn't mean there are sites with content that sometimes need to be accessed that depend on them.
I fully agree that tiny videos embedded in a window are less useful, but it's what's available and there doesn't appear to be any sign of that changing.