I’ve had this problem since switching my project over from Unity iPhone 1.7 to Unity 3 beta 3. At first I thought it was an issue with the betas but now I suspect it’s a side effect of converting my scene over, because I cannot recreate effect with a test project using the same prefabs.
When I test flares in the editor, they seem fine. But once I run the scene on my iPhone 3GS, the flares render incorrectly; the texture pops from one aspect of the flare texture to another. One moment looking correct, the next showing a ring, or a hexagon, for example. Each flare seems to pop between only two states of correct/incorrect.
Here’s how they looked before and after switching to Unity 3:
This affects all flare types in the scene, and they change all at the same time. Distance doesn’t seem to be a factor, though if i steer back and forth it seems to affect the change (but not predictably).
I have tried turning off all my colliders, rebuilding the flares, reimporting the flares, reimporting the entire scene, replacing the camera, replacing the flare layer, playing with texture settings, render settings (both versions of Open GL/ES), going back to a scene older than the one I imported… I’ve tried just about everything. And each thing I try requires a build to see if it works, so it’s been a real time hole!
Any insight into this would be greatly appreciated. I have no idea what else there is to try other than recreate my game in a new project… reconnecting everything just to see what happens is definitely not something I’m looking forward to. 
Thanks!