I'm completely lost here. Are you saying this is built into Chrome without an extension? I've definitely never noticed anything like this. Got a post or link I can see somewhere?
Chrome -> Wrench menu ("Customize and control") -> Options -> Under the Hood -> Privacy -> Content Settings -> Plug-ins -> Disable individual plug-ins -> Disable Shockwave Flash.
If you're autoupdating Chrome, you have to get in a habit of checking the settings menu periodically for new stuff. Unlike the more mature FireFox settings menu, Chrome's is still getting additions.
Unless I'm missing something this isn't anywhere near the functionality of Flash Block. Flash Block puts a placeholder in the spot of any SWF file it would load, and then lets me click to load the file if I want to see it, or quickly whitelist the site if I always want it to be able to load flash.
This appears to be just be turning flash on or off globally (and not very quickly either). FF has that level of control out of the box as well.
If a site has one flash video I want to watch and a bunch a flash crap surrounding it that I don't want, it's nice to able to just unblock the video and not have to whitelist the entire site.