I used Adobe's detection kit, originally suggested by justpassinby. Their system is nice because it detects the version number and compares it for you against your 'required version'
One bad thing is it does an alert showing the detected version of flash, which isn't very user friendly. All of a sudden a box pops up with some seemingly random numbers.
Some modifications you might want to consider:
remove the alert
change it so it returns an object (or array)
--- first element is boolean true/false for "was the required version found on user's machine"
--- second element is the actual version number found on user's machine