Yes. Flannel shrinks a lot and more going one direction than the other on the cheaper flannels.
It won't lose it's nap but it will lose it's body (becomes floppier & softer) so you will probably want to starch it or spray it with sizing before ironing & cutting.
I love flannel but after having to repair the seams in 2 different baby quilts--I always prewash it now.