Privateers that did not fly their national flag in addition to their privateering symbol were considered pirates by maritime convention.
As part of our "liberators, not conquerors" doctrine, American troops entered Iraq after having been instructed not to fly the American national flag. I’m not sure if the regimental flags have also been ordered taken down, though given that a good many of them look a great deal like Jolly Rogers themselves (complete with smiling skulls and crossed weapons), I’d guess that they got left back in the staging areas.
I do recognize that it’s not really the same thing (this is not a maritime engagement, for one thing), but it is a weird move nonetheless. I am inclined to attribute the move to some type of ruse de guerre in keeping with our essentially calling the thing other than what it actually is. I mean, when else was the American flag been thought to represent a feared conqueror?
Certainly not in WWII.
Propaganda is, in a way, its own type of psychological warfare.
Update: Based on photographs I saw of armor attached to the American 3rd Infantry Div., regimental and company banners were NOT prohibited. In fact, one photo displayed a tank in Tuesday's sandstorms flying a flag that looked alarmingly like the Jolly Roger of Calico Jack.