We were still up in the air about SilverLight over Flash for different reasons. We currently use Flash 9. Here are the big issues that are stopping our transition:
1) In flash you can use the div method so you can use alternate content for the user if they do not have flash. Most people use the download flash message but in some cases where flash is used to enrich the experience in the case of a menu. you can always show them an html menu instead. In Silverlight it
2) The second issue is that expression blend does not support source control.
Fixing these issues will make Silverlight a lot more usable.