I am in the process of making a flannel quilt (pieced, NOT a rag quilt) and see HUGE differences in quality of flannels, even a great disparity in LQS quality. For the most part the LQS stuff is very nice, much nicer than anything I have ever seen in a big box or discount store. It is heavier, has a much nicer surface feel (pile)and washed up beautifully with no pilling and minimal shrinkage. By contrast some of the bargain stuff was hardly more than combed cotton and very thin, fraying and pulling apart easily. The one exception in a less than satisfactory LQS flannel was a Timeless Treasure flannel which was noticibly lighter weight. I usually adore Timeless Treasure fabrics, so I will proceed with caution on their flannels.
You can find inexpensive great quality flannels on line.
www.Thousandsofbolts.com has a wonderful selection. The brands I had the best luck with and found to be the nicest quality were South Sea Imports, Northcott, Mayfield and Bernatex. When going to their website, hover your mouse over "Find a Fabric" then select expanded search and under fabric types choose flannel. This will bring back all thier flannels in all colors and you can shop just flannels.