Flat damage boosts don't really replace iterative attacks. They can't, because a flat damage boost has no way of knowing how many damage dice you might have been adding.
Let's look at SWSE for example, that gives a flat damage boost of 1/2 your level instead of iterative attacks.
If your attack has a fairly low vanilla damage rating-- say a plain sword with an average of 9.5 damage-- then a +10 damage bonus at +20 BAB works out just fine.
But if your attack is a +3 holy flaming longsword, and you happen to be sneak attacking for +7d6, well then a flat +10 damage isn't going to come close to replacing the lost iterative attacks. (You'd average 1d8+2d6+1d6+7d6 = ~40 damage, plus STR.)
Vital Strike and Improved Vital Strike work the same way. They only multiply the base weapon's damage-- no bonuses for STR, magical effects, sneak attack, successful crits, etc.
If you're using a weapon that does 1d8 base damage, then Vital Strike takes you from 1d8/1d8/1d8 at 0/-5/-10 to 2d8/2d8 at 0/-5.