At that price, it should be good flannel. when they tlak about the cheap stuff, it is usually along the lines of the 3.95 stuff at Joanne's or wherever.
I have purchased good flannel at my LQS (around $10.00/yd) and you can defintiely feel the difference. It is thicker and washes well.
If I were you, I would complain to the palplace you got it from and see what they say.