Originally Flash files could not be indexed by Search Engines. However this is no longer the case, the larger search engine like Google now are able to index much of the flash file content. Some smaller search engines do not yet have these capabilities and therefore you sould design your site with this in mind.
Google is able to index parts of a flash file (see Google Webmaster Blog):
- Any text in the flash file (.swf) can be indexed and included in searches and snippets
- URL's in a flash file can be discovered
- Image based flash (.flv) cannot be indexed
Remember that anything that is bad for search engines if likely to also be bad for visitors to your site.
- Use Flash to enhance a page rather than creating Flash-only pages
- Always include HTML fallback or splash pages that work with your Flash content
- Consider accessibility and use the Flash accessibility features in the creation package
Bear in mind that optimizing a Flash page for SEO is much more difficult than optimizing a Flash page at the moment.