The US is not known for the overall design quality of its state flags, with many being uninspired, easily confusable “seal on a bedsheet” designs. Yet changing a state flag in order to improve its basic design is a very difficult task, so difficult there is only one good example: Colorado.
This is not to say that state flag designs don’t change, nor that change isn’t often motivated by a desire to improve an in-distinctive design. But time and again this change is for the worse, often taking the form of writing the name of the state in LARGE CAPITAL LETTERS across the front of the flag.
Why is this a problem? At a pragmatic level, writing on a flag is more often than not illegible. When on a flag pole, either it’s hidden by folds when the flag is hanging limp, or it’s blurred by ripples when the flag is flying in the wind. And when hung so that the flag doesn’t move (for example, indoors), if it’s placed so that the back of the flag is visible, the viewer is treated to a bunch of backwards text.
At a symbolic level, it’s a symptom of an underlying failure. As Ted Kaye says, “If you need to write the name of what you’re representing on your flag, your symbolism has failed.”
Take a look at all these examples of state governments deciding that to address their flags’ failed symbolism, they need to put the state’s name on the flag. (And these examples do not include state flags that have had the name on them from the beginning.)
Arkansas
A convoluted history, but the major downgrade happened when the state flag committee told Willie Kavanaugh Hocker to add ARKANSAS to the design.
Illinois
Kansas
Maine
Montana
Oklahoma
A rare example of a big redesign in 1925 that technically involved removing writing from the flag, but the “46” wasn’t seen as the problem — the star on a red flag suggesting communism was.
Rhode Island
A complex case, as the 1882 change was a big improvement, and the 1897 change a big downgrade (but because of unfortunate foreground and background colors, not the addition of text).
Vermont
This is bit of an outlier, as the word VERMONT has never been particularly prominent. Interesting also in that the design has been purposely downgraded twice, in 1804 and in 1923. Is it not due for an upgrade as the pendulum swings again?
Wisconsin
Portland Flag Association 
Now that was depressing. To think that it is easier to change to a worse flag than to a better one makes me want to grab my slingshot and take over a wildlife refuge until all of my flag grievances are resolved to my satisfaction.
I share your feelings. I actually suffered a heart attack when I saw the 23 designs for the new Fijian flag. I thought that having Ted Kaye would prevent any disaster, but obviously not. I never thought the colonial Fijian flag could get any worst, but we’ve got to remain very alert, we the few people who understand the concept of flag beauty.
The original Oklahoma “46” flag has made a huge comeback in the artist and design communities in Oklahoma. Red Flag Press (and, later, This Land Press) was a pioneer in “taking it back.” Red Dirt Report sells 46 flag hats and there’s now a 46 flag license plate. Go into any indie boutique in Oklahoma City and you’ll see the design prominently featured. I hope it’s something we go back to one day, but I imagine we won’t. Of course, part of the allure of the original flag is that it symbolized a time when Oklahoma was the most populist, socialist state in the union. It harkens back to a time when unions weren’t practically outlawed.
At first glance, judging by the first paragraph, Colorado is not the only good example. 11 state flags are pretty descent, esp if you take the seal off Montana, use back if Oregon flag. And 10 of the territorial flags are great flags (removing words off of Johnston Atoll). Rattan than focus on the glass mostly empty, how about an article on the flags that are pretty good?