The rumour comes courtesy of ZDNet, citing the usual "reliable sources" (several of them, even). According to the rumours, the announcement of the deal will be made today, and since today has barely started in the US (we're past half-way here in the old world), it might still take a while for the news to arrive (if true, that is).
For some reason (can't put my finger on it) I find it unlikely that Google will bundle Flash with the Chrome web browser - it seems far more likely that the Chrome operating system will include it. After all, Chrome OS is targeted solely at the web, and whether we like it or not, Flash is part of the web and here to stay. It would make perfect sense for Google to include the runtime with its operating system.
It could also mean act as a selling point for Google when competing with Apple on the iPad. While the Chrome OS is targeted at netbooks, it will surely appear on tablets as well. We've already seen countless Android tablets, so this rumour might also mean that we will find Flash on Android devices.
Whichever way you look at it, it would be an interesting turn of events. Google has been very supportive of HTML5 and related standards and openness - at the same time, however, Google is actively pushing H264, the patent-encumbered video codec companies like Apple and Microsoft are trying to shackle the web to. In other words - Google is obviously no saint, so the company promoting Flash certainly shouldn't come as a surprise.