When you set swftools_media_url in settings.php to be a folder from the server document root, this prevents the automatic size detection in swftools_get_info().

We have two environments, and when migrating from one environment to the next, we were having issues with the entire absolute URL being used in the param name="base" and param name="src" directives that prevented the flash from being displayed.

When we added the swftools_media_url in settings.php as:
$conf['swftools_media_url'] = '/sites/default/files';

Then all output was generated as
swfobject.embedSWF("/sites/default/files/ifilename.swf", "swfobject2-id-XXX", "", "", "8", "",...

And because the third and forth parameters - the height and width - are set to empty strings the flash would not render.