I spend 0% of my day looking at the back of my phone. Using the flash as a notification light would do me no good as my phone is either in my pocket, on it's back with the screen facing up, or in my hands with the screen facing me.
A LED on the front is a whole different story, but I don't get why people keep bringing up stuff like this for the current hardware. We all knew the iPhone 4 (and all of it's predecessors) did not have a light based notification system and we still bought them, no sense in complaining now, you can't change the hardware. Apple will get with the program one day and they will put a new notification system in. Maybe iPhone 5, maybe not- we all know they won't do it until it's close to perfect and decidedly sexy.