As someone who has played for years and played every edition I have watched the game become more codified and depend less on DM fiat now some say this is a good thing because it helps inexperienced DMs plan CR and XP awards. But I have seen a negative aspect as well and that is DMs often get boxed into a corner and can't try new things because oh my gosh it is not part of the RAW.
Like the rest of us haven't been playing for ages?
I'm pretty sure I first saw the term "rules lawyer" back in Dragon during the 1e days. Folks have been trying to box GMs since the beginning. Players have an investment in their characters, and they don't like to lose, so some of them will argue a lot. No arrangement of rules will get rid of that, because it is human problem, not a rules problem.
I have also read people talk about other systems where in their experience the flaws work. Like my experience with Shadowrun and never once seeing flaws abused badly that they unbalance or break the game.
You can't have it both ways, you know. You say that players will try to box a GM in with rules. So, if you ensconce merits and flaws in your rules, what's going to happen? Some players *will* try to abuse the letter of the merit/flaw rules for their own benefit!
Sure, some groups will have no problems. No argument there. But, if you put them in the rules (core or "optional", for arguentative players it doesn't make much difference), you're putting a GM in the situation of having to get his players to accept changes to them if they don't work well for him. And you just got done saying how difficult that can be.
So, while I like some games and their merit/flaw systems, I can't really blame the D&D designers for not including one. Nice to have, but my game would run fine without it, too.