I think it would be really nice if I could upload a custom flag in a vector format like SVG, since a lot of flags and other works of graphic design use vector graphics. I think it might please some of the more avid vexillologists of this site.
I even will sometimes vectorize my flags as doing so fixes some mistakes I often make while editing my flag.
Based on my limited technical knowledge, I would guess that the changes needed are not particularly major, as the HTML img tag can be used to embed SVGs the same as any other image.