Google places a great deal of importance on their browser, and for good reason! Today at I/O, they announced some very big improvements to their Android browser. Considering the fact that “browser” is one of their five pillars it isn't hard to see why.
With Froyo, you will be able to access the magnetometer, accelerometer, speech to text, and even the App Market within the browser. Flash 10.1 and AIR support were also confirmed. Google made a big point of the fact that much of the Internet runs on flash. A truly open device needs to be able to access the whole Internet. Flash will launch with Android 2.2 and require a Cortex A8 processor.
This means the Incredible, Droid, Nexus One, and Evo. Everyone else...bummer.