Silverlight isn't just a compact, streamlined version of WPF, it is a compact, streamlined version of the entire .NET framework. It inherits some features in WPF but running in browser. The silverlight runtime now is just 4mb, so compare to 160mb of .net framework 3.5, it cannot inherit all classes from WPF. If you would like to deliver a Rich Internet Application (RIA), Silverlight is a good choice. Otherwise, for rich client application or call desktop application, WPF should be applied.
Two big reasons why WPF is still relevant(From Jeff Proise's perspective):
1) WPF has lots of cool accelerated 3D support that Silverlight lacks. Silverlight lets you build rich applications; WPF lets you build even richer applications.
2) Silverlight runs in a sandbox. Among other things, it can't access the local file system. (It does support isolated storage so data can be persisted locally, but isolated storage is highly virtualized and is a far cry from unfettered file system access.) WPF is the better choice for building traditional document-handling applications.
There are other reasons WPF is still the right choice for some apps, but admittedly, Silverlight blurs the line between traditional apps and browser-based apps and it opens up a whole new world of possibilities for the latter.
ref:
http://blogs.windowsclient.net/andrejt/archive/2009/02/11/wpf-vs-silverlight-a-subset-or-what.aspx
http://www.tozon.info/blog/post/2009/02/11/WPF-vs-Silverlight-a-subset-or-what.aspx
Adobe AIR vs Flash vs Flex vs Microsoft Silverlight -http://www.scottklarr.com/topic/39/adobe-air-vs-flash-vs-flex-vs-microsoft-silverlight/
Flex vs Sliverlight - http://forums.silverlight.net/forums/p/634/1076.aspx
Flash vs Flex - http://kinderas.blogspot.com/2007/08/flash-vs-flex-what-to-choose-when.html