Have used this module loads of times on Jommla sites for clients and never had problems. Am trying to set up community site using AbleOrganiser which uses the Drupal Zen template. Have modified inline css to display inline-block and put px after img size still no flags. They display fine in drop down select list , Try here for a view http://blackdog.co/organise/
If I switch the site default template to Bartik all works fine, so I reckon it's definitely a CSS issue that I cannot fathom now.