Ok everyone, I have THE answer to your problems. Now, considering this may be different for some, on their old phones, thats for you to know.
Anyways, the notification flash works as intended. A notification flash works by telling you there is a nee alert, when you are not using your phone (ie, when the screen is off). Those of you testing your work, have the screen ON while your waiting for the LED flash. Therefore it appears to not work. The LED is unnecessary when you have the screen on. When your on the phone, you get the icon, hear an alert tone, and even the vibrate. With the Mail app, it checks the server, at most, in as little as five minutes. So, you must test the mail LED flash, with the screen OFF, and wait at least five minutes. Also make sure your volume isnt on silent. If it is, your phone senses you don't want to be bothered at all, so off goes the LED flash too.
Lastly, the LED flash isnt necessarily for apps, however you can manage this in the apps themselves. Notice how is says Mail, and not Gmail.