If you use Illustrator and Flash, you should upgrade to Illustrator 10 for the symbols support alone. Illustrator lets you turn any piece of artwork into a reusable symbol which gets preserved when you export to SWF. Illustrator's unique symbol sprayer tools let you create some really interesting artwork, especially when you apply a little ActionScript.
To create a symbol in Illustrator, simply drag the artwork into the Symbols palette. To place an instance, drag a symbol from the palette to the canvas. The Symbols palette can be toggled by hitting Shift-F11, or you can edit your keyboard shortcuts to make it the Flash-standard Cmd-L/Ctrl-L. You can load up any Illustrator document containing symbols as a symbol library (Window->Symbol Libraries...) that appears as its own palette, making it easy to reuse artwork across files and projects.
When you press F8 in Flash to convert artwork into a symbol, the artwork on the canvas is replaced with an instance of the new symbol. By default Illustrator creates a new symbol but leaves the artwork as paths on the canvas. To get Flash-style behavior, drag your artwork to the Illustrator symbols palette, but start holding down Cmd-Shift (Mac)/Ctrl-Shift (Win) after you begin dragging it.
You can create nested symbols and update symbols contained within others. To nest a symbol inside another, drag an instance of it along with whatever else you want in the new symbol to the Symbols palette. Bear in mind, however, that when you import a SWF containing nested symbols into Flash, Flash will discard the top level symbol, meaning that you'll have just the underlying instances without the nesting. This won't affect file size, but it may complicate your efforts to script the symbols in Flash.
::> Editing symbols
Illustrator doesn't edit symbol artwork in the same way Flash does (double-clicking and making changes that are reflected in all instances). Instead, to edit a symbol, select an instance on the canvas, press the Break Link to Symbol button on the Symbols palette, and edit the artwork. When you're ready to update the symbol, make sure the symbol is selected in the Symbols palette, select the artwork, and choose Redefine Symbol from the flyout menu on the Symbols palette. You could also hold down Opt/Alt and drag the edited artwork onto the symbol in the palette.
::> Transforming instances
Illustrator allows you to apply transformations and effects both inside a symbol and to its instances. If file size is a concern, stick to instance transformations that Flash can handle natively (scale, skew, rotate, and fade), and apply other effects inside the symbol so that they can be reused. For example, applying a drop shadow inside a symbol vs. outside can cut the file size from 60kb to 5kb (shown here). Also be careful about applying effects like warps to symbol instances. If necessary Illustrator will convert symbols into paths on export to preserve an effect (shown here).
::> Bitmaps and symbols
Symbols in Illustrator can contain bitmaps (including bitmaps with soft-edged transparency), making it possible to create efficient SWFs using bitmaps inside symbols (the example below is 9kb). Note that you can set bitmap options (lossless/GIF or lossy/JPEG compression & quality) in the export settings dialog box, but not when making a SWF via the Save for Web command. (Save for Web uses whatever setting you used last when exporting directly.)
Tip: You can speed up saving and conserve disk space by disabling the "Make PDF Compatible" option when saving files that use symbols extensively-- especially symbols containing bitmaps. The PDF portion of an AI file allows PDF-aware applications like InDesign and LiveMotion to view and manipulate the contents of an AI file, but it stores each symbol as a separate copy of the artwork. Until you're ready to place your AI file into those applications, consider disabling PDF compatibility in your AI file. To turn it back on, choose Save As and re-check the PDF option.