All flask recipes will now create 2 flasks for the same amount of ingredients, but flasks will only last half the amount of time.
This means where you used to make one flask of awesomesauce, you now get two flasks of awesomesauce. That's a lot more awesome for the same amount of sauce.
We can speculate that this change is in part to due to the difficulty ramp-up that will occur in Ulduar. We know that Ulduar is going to be harder, and so this change will help soften the time required to come prepared. And as someone who flasks and eats food religiously, this is a welcomed change.
Of course the downside to this change is that flask prices will drop on the AH, meaning people will earn less money off them. But at the same time, raw materials will likely go up a bit since folks will be wanting to have their flasks made for them now more often. We'll have to wait and see to be sure, however.
Edited on 3/23/09 at 9:40 p.m.: Updated with more recent information.
Patch 3.1 brings us Ulduar, dual specs, significant changes to all the classes, and more! We've got you covered from top to bottom with our Guide to Patch 3.1.