Use flags only for temporary purposes - like picking and identifying rejects when you've just imported new images. If you want to apply a lasting evaluation of an image, don't use flags - use ratings or labels.
There's a mantra - flags are local, ratings are global. While I'd like there to be an option to make flags global, and would probably set it myself, there is a logic to the way things work now and it meets certain needs. For example, imagine a wedding - you might have the images in one collection with flags for the couple's choice for prints, and a similar collection with different flags for their choice of what goes onto a multimedia DVD. This local behaviour gives that sort of flexibility.
John