For three years, starting around 12/31/05, shooting this type of an image got to be an informal annual tradition for me. This is done entirely in camera - no overlays, no multiple exposures, no Photoshop - no nuttin'. Unfortunately it requires a horizontal glass surface and we got rid of the glass topped table. Until I can figure out a fallback, I'm recycling a favorite made on 1/1/06.
If you're curious how this is done and/or want to try it yourself, an example and explanation of an earlier version I made of this flag subject is at http://www.pbase.com/ed_k/image/29534493
PS - This image is a day late getting posted. I post to two sites and coincidentally both were down at the same time last evening (12/31/08). Too much holiday celebration??