I definitely wash flannel. I just never know how much shrinkage there will be, unless I'm using it as a receiving blanket. Then I'll crochet an edging and wash after. No real reasoning behind that other than I'm usually in a hurry to get the edging finished so am in a hurry to get it started! As for the cutting fabric, I never cut it until I'm ready to use it. If I have purchased for a specific project I'll cut the pieces to size at the time. What I have found is I seem to have to re-square up a piece after every 3-4 strips and hate to waste any.