why magento doesn't enable flat model by default?
- The flat catalog was introduced in 1.4 so I suppose they didn't wanted to breakdown stores that were already existing and had modules that were based on EAV model restrictly (how a module can fail in flat catalog - great reading here on Alan Storm's blog [always good source of Magento informations]: http://alanstorm.com/magento_flat_collection_chaos)
- The EAV system is the most flexible way to store data. The con of it is as you said more and more complicated queries to database but there's more functions that developers can use.
- There's not so much performance boost when there isn't so many products in database. Developers/Merchants should be able to decide about that while considering the budget, hosting, traffic, etc.
The flat catalog flags cannot be enabled by default because in order to use the flat tables they must exist.
The install scripts do not create these tables, because they should be created when everything finishes installing.
This is because some additional modules might add product and/or category attributes that should be added as columns in the flat tables.
You cannot enable the flat flags until you rebuild the indexes for the first time.
Check how the rendered for the flat flags works.
If the flat tables do not exist (or at least one of them) the field is disabled in system->configuration.
Reindexing the flat products and categories will enable the flat flags fields.