Flannel is tricky to work with bit i'll often use it on a quilt that I know will be used for cuddling. Definitely not for show quilts.
The suggestions above are good. Always pre-wash and starch before quilting. It takes out a lot of the stretch problems. I've recently discovered 505 spray baste (it's actually kind of expensive in Canada) but it does help a lot. Otherwise, go baste wild because it does reduce a lot of the shifting.
I've also noted that there is a wide variety of quality of flannel out there. The better stuff (ie, the softer, heavier stuff) doesnt shift as much when you quit on it. I guess this is the same advice for regular quilting cotton.
Kristy