I think the flag-thing is intresting. Although it can send mixed signals, I think it's nice that people can show that they're proud of their country by waving the flag.
In Finland, where I'm from, it's a big no-no to openly wave around the finnish flag in any form, unless it's a national holiday or if you're a right-wing extremist. In a way I think that's sad, because that's not what the flag is supposed to represent. It seems to be the same way in Sweden, although I think people there just don't want to bother anyone with their flag, they're afraid that it might make the immigrants feel less at home or something.
When I lived in Denmark a year or two ago, I was surprised that they waved their flag at every possible opportunity, they're proud and happy to have the flag all over the place. I thought that was really nice.