Flagging is still in use within the London gay scene. And there are loads of shops that sell coloured bandanas to fold into your pockets...
For added confusion there is also a certain amount of difference in colours used depending on which list people have found, different lists for lesbians etc, nothing diffinative seems to exist! So even if you think the person is offering what your looking for... might be a good idea to discuss it!
The basic colours (red,yellow,brown and a few others) have migrated to being used in personal ads too, listing the colours rather than acts you are interested in... In this way quite explicit ads can appear even in the most conservative of publications!
The concept of flagging left (Dominant/Top) or right (submissive/bottom) is also common with keychains being hung on the appropriate side - However with the increasing use of mulitple keychains by youngsters as part of fashion, it's probabally safer to double check!!!!
jad