When it's your country's flag it's ok, just remember to observe flag protocol; take it down at night, in bad weather, fly other flags at equal height! Flying the US flag higher than others or vice versa is in essence a declaration of war. The problem lies in US flag protocol:
wall of shame:
What also really gets me when our flag (the flag of the Netherlands: Red, White and Blue) is used for silly decorations in the US, especially for roadside stalls selling produce.
The thing is once you display your flag, for being honestly proud or patriottic, someone else could display his, and the whole thing could become nationalistic and politised. What if your colleague or neighbour puts up a North Korean flag?
So when you're in a public place (incl work) the flag should be a public display, not an individual display. If you put up one flag it should be represent the nation you're in, next include the company's home flag, flags of guests and visiting companies/indivuals (ie customers) and, lastly, flags recognising individual workers.
On a side note, I remember that the (US!) company I worked for took down all the flags (inc US) displayed at our office, after September 11th, out of fear. Which I found paranoid and cowardly.
I found this as well, in United States' Code:
§176(k) The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning.