We do actually. In France we have many stickers of regional flag (Occitania, Basques, Corsica,...) on people's car. in the UK, The Welsh and Scots also do that, if I'm not mistaken. And in the US we have the very controversial Confederate flag, while in Canada there are people who show the Quebec flag.Yeah but you dont see people painting cars or airplanes with extinct country flags. Instead maybe we should get superpower paints (federation, empire, alliance) instead of 1,000 year old (in game) country flags. But thats just me.
None of those places have been sovereign country ever or for a long time.
It would make sense to show old country flags in the Federation, to show one cultural ancestry.