Lens flares are an artifact of camera-usage. Basically, it's caused when a camera pointed at a too-bright source (like the sun) causes bright spots to appear on film. Sometime a few years ago, every space-scene had to include a few lens flares to give added realism to bright objects on the screen. The technique, interestingly, seems to have migrated into 3D games. Every 3D game you see nowadays, especially racers, have lens flares.
What I don't understand, however, is this. If game-makers are working hard to make their games a completely immersive experience in which you "become" the character in the vehicle, why are they showing an artifact that only occurs when viewing something through a camera? It seems to me that if designers were trying to make a game more realistic and less movie-like, they'd want to avoid lens flare effects.
Actually, I know why. It's the same reason that guns make a "PaTANG" sound in movies when they just make a dull "POP" in real life. People just expect things on-screen to work a certain way.