Probably the colors on the flag have nearly completely faded. Most color pigments are not all that stable to intense light, and will photodegrade, especially under the bright harse high energy radiation which impinges on the surface.
The flags were also made of nylon. Nylon also photodegrades under high energy light (deep UV and higher energy). The flag is probably tatters now, slowly photosubliming away as the nylon is depolymerized into volatile fragments.
I recall that the one of the astronauts mentioned in some interview a decae or so after Apollo 11 they saw the flag fall over during liftoff. And wasn't there a video from Apollo 16 or 17 of the flag blowing wildly in the liftoff breeze?