Apple is forced to not say the iPhone gives users the "full internet" because it doesn't handle nonstandard, proprietary technologies (aka Flash) in the UK.
This is like someone suing GM when their Corvette doesn't work with snow tires.
Apple's response to being forced to pull an ad:
Apple said the Safari web browser on the iPhone was built to open internet standards, the same as Safari on a home or office computer, and supported open standard languages such as CSS, JavaScript and Ajax. They said proprietary languages or technologies, such as Flash or Java, were not open source and required a plug-in or individual download in order for content to appear within the specific browser, regardless of whether the access to a site was made from an iPhone or home computer. They said they could not ensure compatibility with every third party technology in the marketplace and, in order to create the best customer experience, had created their platform on open standards.(link)
It's also worth noting that Adobe (and before that Macromedia) had pretty much always told Apple to 'suck it' regarding the performance of flash on their desktop platform - Mac OSX, which the iPhone OS is based upon. Playing flash on the Mac sucks. It's slow and a resource hog. In fact, just read this and this which will explain the whole situation better than I ever could.
(Link via DaringFireball)