Big Grecian,
The flap problem you refer to is the fact that the selctor lever often disconnects/ jams from the electric switch. So while the lever is moved to the up position the flaps remain down, as a result a student can get airborne with full flaps at a low airpseed, the switch suddenly un-jams on the climb out the flaps retract and the aircraft stalls.
However Grecian this is not a reason to not do touch and go's, it is possible to visually inspect the flaps during a touch and go, I always train student to select flaps before applying full power to prevent the above occuring.
I have to say i'm with BG on this. You can train PPL students this method until you are blue in the face, but human nature dictates that under pressure with a lack of experience sooner or later someone will become unstuck.
Picture this, T&G at an airfield much shorter then you are used to, you touch down and realise that there isn't much runway remaining, you select flaps up (on a h/wing cessna) and apply full power, in the high stress situation you are in due to lack of experience, you decide to continue the T&G instead of stopping and taxiing back, you forget to visually check the flaps and the flap switch has failed and you climb out with full drag flap...
Happened to a student I knew in 2005 who was pre-PPL solo, a/c entered a stall/spin at approx. 300ft and the accident was fatal.
I don't think that T&G's should be banned for students, but regulated far more by the schools. I can understand a school's perspective, a law suit from the deceased's family could put them out of business.
Like anything in aviation it is a calculated risk of safety vs saving money, a certain amount of hull loses/fatalities will be accepted per xxxxx if there is a chance of saving money, but try telling that to the deceased's family.