The flannel should be fine without washing *if* you are cutting 5" squares *and* quilting an X through each block. If you are not quilting the X, then definitely prewash the flannel. Quilting ties the flannel to the batting. When you have sufficient quilting (which I think an X through a 5" block would provide, assuming the batting is Warm and Natural), once the block is quilted the flannel will not be able to shrink more than the batting. If you were cutting 10" squares and machine quilting an X, this would not be enough to prevent some of the flannel from shrinking more than the batting.
My thought, to be honest, is that the quilt is for the child (not the parents), so I would still enjoy making it. Also, if I thought about it, the child is likely to love the quilt and drag it around for years -- making a wonderful way of daily reminding the not-so-likeable-adult of me.
