Bornakk offered a lengthy explanation behind the changes to Flasks in Patch 3.1.  Though flasks get a nerf in duration, players will reap greater benefits.

Blizzard Quote:
As many of you have learned, we will be reducing the duration of flask effects so that they only last one hour. However, all recipes that create flasks will create two instead of one for the same material cost. Additionally, we will be increasing stack size from 5 to 20 as we anticipate players will need to carry more flasks at a given time. Vendor value for flasks has also been reduced to keep the auction house deposit low.

Our goal with the change was to allow players greater flexibility when determining how long they plan to raid, as currently we were seeing many players balance time spent raiding around flask duration. We also anticipate that this change will make using flasks in dungeons and battlegrounds a more reasonable decision for players. Though this change will not occur until patch 3.1.0, we wanted to give as much advance notice as possible in case some of you who are stockpiling flasks would prefer to wait to do so until the change is implemented.

We realize players who currently have stockpiled a lot of flasks may feel like they will lose money with this change, since their current flasks will only last for half as long once 3.1.0 goes live. To partially remedy this, we are going to allow players to exchange any current Northrend flasks (Flask of the Frost Wyrm, Flask of Stoneblood, Flask of Endless Rage and Flask of Pure Mojo) for two flasks with the shorter duration. Flasks from older content will not be grandfathered in, and going forward, it will only be possible to make the flasks with a one hour duration.