I have made many tops with flannel. I use a 1/4" seam as usual, iron seams to the side. I've used smaller pieces without any problems. I wouldn't pick a pattern with small pieces, but I have used scraps that were given to me. Also FM quilted them, not a tight design and avoiding thicker seams. The only suggestion would be to avoid a patter with HSTs because of the stretch, unless you sew your triangles together while they are still a square...if you know what I mean
)
They make wonderfully cozy quilts with flannel on the back.