Right now we have few colors when it comes to building using cloth: yellow, green, brown, white, and blue. We completely lack the black, orange, purple, and red pigmentation.
It would be nice if we could use pigments in conjunction with wool cloth (or any cloth, even better) to make a pigmented-cloth that will in fact show up when used in buildings. I'm talking about stuff like village banners and border cairns, windmills, knarr sails, etc...
Just like any other material, this would only be visible in building-menu items (like those above), not in craftable ones (like shirts and pants).
And since we are talking about flags and colors, there is one more thing: visitor gates.
Visitor gates show up with two red flags. It would be nice if we could change those using different cloths, even if that means requiring a piece of cloth to build it in the first place.