I usually pre-shrink flannel, unless it's a rag quilt. It's a good idea to serge the edges (or sew a zig-zag) before you wash flannel so it won't unravel. I also like to use my walking foot. Flannel is kinda loose and squirel-y when you sew it, and a walking foot helps a lot. And I do give it a slightly wider seam allowance -- just a bump of the needle position.
I love flannel quilts because they "breathe" well, and wick away any moisture.