I'm going to go with flag.
No one's character is actually going to look like the image in the stock picture anyway, and I think it would give a sort of lumpy stock ugliness to the image. Contrast it, for example, with the wowsigs, which are pretty neat and concise.
Most people are more interested in your vital stats -- nation, race, rank, jobs -- than in a stock character image that won't resemble you ingame anyway.
That's just my opinion of course, and having both would be nice, but if it's one or the other I vote flag. It's classier looking.