The paladin has been designed around Flash of Light, just like the shaman was designed around Chain Heal. We didn't want to completely change what these classes were all about, in part because a lot of players like them as they are. We figured players who gravitate towards wanting lots of different kinds of heals can play the druid or priest. Players who want to have relatively few spells and can then focus on cooldowns, trinkets or the like can play the paladin or shaman. We think it would be dangerous for paladins to pick up Lich King and find their class had completely changed.
Flash of Light represents everything that is wrong with the Paladin healer. Cleric. Clothadin. Healbot. Boring. 2-button spam. Standing at the back of the raid. Completely changing the playstyle from levelling. Not hitting things with a giant hammer.
I wrote this in 2006, two and a half years ago, and it still applies today:
Flash of Light is the real problem with the paladin class. A single cast of FoL heals for a trivial amount, but at a trivial cost. This means that a paladin generally casts multiple FoLs in quick succession to actually do anything. I've heard Flash of Light described as a "channelled heal-over-time spell." And this is precisely what it is. The paladin stands there and channels her mana into the tank's health bar.
The problem is that if you are channelling, you cannot do anything else. And the essence of a paladin is doing multiple things at once! The mechanics of Flash of Light cut across the very grain of paladin playstyle. So remove Flash of Light in its entirety. Soloing will not miss it. PvP will not miss it. And PvE will be better for its absence.
If you really want to fix paladin healing, to make it more enjoyable, I believe that Flash of Light will have to be removed or drastically changed. I find it really disheartening that not only does Blizzard not see this, but they have deliberately designed the class around Flash of Light.