I'm currently quilting a lap size quilt w/ a flannel back. I did prewash the flannel because I didn't want to take the chance that the flannel backing would shrink differently than the cotton front. I will wash the entire quilt before giving it to the receiver. I like the wrinkled look.
I do whole-heartedly agree w/ the quality of joann's fabrics these days. There is no comparison to the feel of the flannel at joann's and the feel of the flannel at the quilt store!