It is not just British regimental colours that can be found hanging in churches. This practice is also followed in Canada. In Winnipeg a number of older churches have colors slowly deteriorating in their sanctuaries. For the most part these are Militia Colours (Canada's equivalent of the National Guard) or Colours from the First World War issued to battalions raised outside of the Militia or Regular forces. Similar examples exist all across Canada.
The flags add a little extra when one goes to a wedding, christening, etc.
Ryan