Why Flash? The OS must survive power crashes and other nasty events without ever failing. If the data storage (which is on a regular HDD) fails, the OS will simply rebuild it, but in order to do that it must not fail itself.
There's certainly nothing unusual about running Linux from Flash ROM--Linksys does it :)--but doing so to increase reliability only makes sense if the dangers you're worried about can be solved by switching storage media.
A perfect reason to use flash media instead of hard disks is the moving parts issue. If your installation is subject to shock or vibration, hard disks are disasters waiting to happen. If you can eliminate the cooling fans too, you can have a zero-moving-parts computer, which can can be wonderful.
I can't come up with any possible reason why storing your data on a flash drive would make you any safer against a power failure. Journaling (and disabling hw cache) does that for you. If you lose power in the middle of a write with a journaled fs, you may lose your data (nothing can protect you there), but at least your filesystem will be in a consistent state. Remember, "consistent" doesn't mean "what you wanted", it means "safe to use". If you're writing to an SQL database when you lose power, your tables may not be in a consistent state, but at least the OS will boot. Certain RDBMS makers take great pride in their ability to maintain consistent state even after a power failure--but not all can do it.
If you're worried about storage device failure, RAID might be for you. If you're worried about power failure, a UPS may be in your future--get the kind that can signal the computer to shut down. If you're worried about damage to/by moving parts, Flash media is perfect.
Choose the fix that bests suits your problem. That's what I say.
Unless, of course, your fix is to use one of those gumstix computers. You're allowed to use those to fix anything. I've been searching for a year for a valid excuse ..er.. problem to solve with one of those.
