Ronan introduces some very good points that reduce the probability of the "Betsy Ross" flag's use by the Continental Army. However, none close the door on possibility. Here is a nice bit of research on the original Stars and Stripes by David Martucci:
http://www.vexman.net/13stars/
William Barton's seal designs (#11) suggest that the "Betsy Ross"-style design existed during the war. Though I will readily concede that a watercolor representation of the flag doesn't provide solid proof that it was ever rendered in cloth or carried by soldiers.
Personally, I believe folks over there on the far side of The Pond are worried the US will issue a cease and desist order regarding that trademark infringement occasionally known as the European Union logo. 