Update: Adobe has retracted their claim (via MacRumors) that OS X Lion disables Flash Player hardware acceleration. Great news:

In addition to the goodies Lion brings to your everyday computing, some unwanted side-effects surface with Adobe writing in a knowledge base article yesterday (via TUAW) that the operating system disables hardware acceleration while exhibiting other issues with their Mac apps:

Other affected Adobe products include Fireworks, Illustrator, Acrobat, Lightroom, Photoshop and Premiere Pro. On a brighter note, Adobe promised to “investigate” which of the Lion-specific features will see support in their Mac programs, such as Restore, Autosave, Versioning, Full Screen Mode and new multitouch gestures. Adobe on Tuesday released Photoshop Elements on Mac App Store for $80, a modest saving over the $99 for boxed version. The release marked Adobe’s first offering on Apple’s online-only store for Mac apps.

Making good on Steve Jobs’ promise to get rid of legacy technologies in Apple’s products, Lion installation does not include Java runtime nor Flash Player, both of which users are required to install manually. Earlier this month Adobe released beta versions of Flash Player 11 and its run-time environment, AIR 3. In what could only be described as a step towards a file system-agnostic environment akin to iOS, Lion also hides the Library folder from view to reduce the chances of tech illiterate users accidentally deleting application support files.