The flutes play an important role as the highest pitched instruments in the wind band. They also have an instrument that is conducive to playing fast passages. This means that flute players often have difficult parts that are crucial to the piece as a whole. While the upper register is very audible, the middle and low registers are much harder to hear when the entire ensemble is playing. Thus, flutes generally sit in the front of the band. How they are oriented beyond that is a matter of debate.
In general, having flutes on the conductor's left side (stage right) will increase the flute sound in the balance. If the band has too few flutes, they could be placed on that side. If flutes are often too loud in the balance, they should be sat on the right side. Either way, the principal player should be placed to the left of the section so that each player can clearly hear the stronger player's sound.
Depending on the quality of instrument and the strength of the player, the piccolo may need to be seated towards the middle to cut down on volume, or towards the outside to increase volume. The confidence of the player is a factor as well--do they need to be "protected" in the center or can they shine closer to the audience. Another factor is proximity to the Eb clarinet or high clarinet 1 part as that is often doubled.
Depending on the number of flutes the band has, flutes may need to take up the entire front row or be split into two rows. If the clarinets and oboes can't project from the second row, they may need to be split. If there are no strong players on 2nd flute, it might be beneficial to leave all of the flutes together in the front row.
Every band and band room is different. The quality of sound, ease of listening, and logistics of the room are the main factors. As long as these are taken into consideration, there is no wrong answer.