Wash and dry it twice, just to make sure that it has shrunk down completely.
Are you using two layers of flannel? One for the batting and one for the backing? I would use 1/2" seams as flannel tends to fray more than some fabrics. If using two layers and sewing each one to make the pieces big enough, I would stagger the seams, so they are not stacked on top of each other. Maybe one towards the top and the other flipped around towards the bottom.