The dust would settle back down because the moon DOES have gravity...and the no there is no wind on the moon, but the fact there is no atmosphere means that the inertia from the flag being jammed in would not go away, as there is no friction.
But I did find this convincing argument that it was a hoax:
http://www.stuffucanuse.com/fake_moo...n_landings.htm so iunno