Speaking as a player, I think flaws are over rated :)
More specifically, my hero should spontaneously generate interesting story-lines, should be human enough that everyone can identify with him or her, and should not upset the game balance. There are a lot of ways I can balance a write-up to make sure that happens.
Flaws are important to balance out characters who take very strong abilities in one area, of course. If the hero starts out with an enchanted chain byrnie, an iron sword, close combat 5W and great stregth 1W, he'd better have some flaws that will keep him from totally unbalancing every combat the band ever sees, or at the very least have some very powerful enemies after him.
On the other hand, if I design a farmer and family man who has been forced into heroic situations by the hand of fate ( or arachne solara's web or whatever the equivalent heortling term would be), he might not need any "flaws" as such to be balanced. His basic flaw is that much of his experience is of only limited use in many of the situations that he finds himself in. As he becomes more capable as a hero, he may well pick up some flaws along the way, of course.
Finally, for some characters their driving motivation becomes not just a great story hook but, in essence, a powerful flaw that may not need to appear on the character sheet. I would assume that hero points awards will often be modified upwards or downwards by how much you've followed your driving motivatoin. If you have a very awkward motivation you may be wrestling with it almost every play session, and therefore either making difficult choices or possibly not getting quite as many hero points.
In short, flaws are a good tool for balancing out heroes, but they are only one of several possible tools, and as a player I'd get annoyed at a narrator who fretted about them too much.
--Bryan
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