Just because it's the largest, doesn't make it the flagship. By your logic, the Escalade would be it.
A division's flagship is the car that they put out front to represent the brand. It is usually the most advanced vehicle they have and a sign of where they are going. That is why BMW has their 7 series in that position. Other companies that don't have sedan flagdships are Chevy and Dodge with the Corvette and the Viper.
Currently Cadillac's flagship is unquestionably the XLR. Read the brochures and see how they position it in the ads...
Maybe this will change with the STS, we'll have to wait and see...
The current flagship is DeVille (including DHS and DTS), because it's the largest sedan among all Cadillac vehicles, as well as MB's S-classe and BMW's 7-series.
By your logic the Fleetwood Brougham would have been the flagship in the early 80's, but that title went to the Seville. The flagship usually isn't the biggest car or biggest seller. It is typically a niche vehicle, like the XLR, Corvette and GTO, and usually the most expensive.
The flagship of the entire brand is indeed the XLR, as it should be. However, the flagship *sedan* of a brand is usually the largest, most gadget-laden or most powerful they offer. It seemed to me that the DeVille and Seville were so similar that there was no clear flagship sedan in past years. I think now the direct competitors to MB, BMW and Lexus are being shown more clearly.