you are on the right track with the washing and drying....flannel does shrink a lot the first time it is laundered. BE SURE to check your lint trap often!!!!
I use a 1/2 inch seam on all my flannel quilts....don't do triangles with sharp points becasue of the bulk of the fabric but simple squares or rectangles are fine with the wider seam allowences that ( I think ) flannel needs!!
jodi