It happened to me this week: flags were replaced by words. Following a restart of Mail, I now also have flags AND the text next to it, or an ellipsis (…) if the column is too narrow to show all the text. The nice thing is that you can make the column even narrower, so that only the flag is showing. That could be the solution when both flags and words are there, just hide the word away from sight.
I am wondering whether the words have been there all along next to the flags, and that they only came in sight when the flags disappeared. Only showing the words could be an alternative to flags for colour-blind people, but what is shown (flag, word or both) should be an option in Preferences.