I have seen the English, German and Finlands flags being waved from the grandstands. I have also seen a load of other flags pinned up on the front of the stands such as Scotlands, Brazils and the Ferrari's "coat of arms". Perhaps you should spend more time looking at the replays, before you judge the "issue of missing flags"?
As to the marshalls not coming out to wave blue flags, I can understand why the programmers did so. Normally at real F1 races, marshalls only wave their flags from behind their protected positions. Otherwise they run a high risk of getting killed or maimed, as the past has proven so many times.
Now the reason that they DO run out with the yellow and green flags in the game is probably because we as gamers cannot have a proper sense of peripheral vision (approx 180 degrees). We only have about 20 degrees because of the limited size of the screen of the monitor. They could have given us 180 degrees but then everything would look warped and fish-eyed.
And if they had planted the flag marshalls behind the barriers as they should be, we probably wouldn't see half of them. Hence they run to the trackside, but only when it is strictly necessary, like when you are running a risk of hitting a car that isn't moving (yellow and green flags). Making the marshalls come out to wave blue flags would probably make the marshalls come out on 50% of the laps on average. I would get pretty tired of looking at them, if I saw them waving flags and running back and forth every 3 minutes or so, for a 90 minutes race.
I think it is a fair and decent compromise, between playability and what happens at real F1 events.
It's only after we've lost everything, that we are free to do anything.