Originally Posted by corruptfate
I don't think LED flash is capable on 1.6 which is what the Xperia is on, But it will be available when it gets 2.1
This. Though as was mentioned it seems the latest update allows flash to be used with the Vignette app but not the stock app which is limited by the Android 1.6 as corrupt has already mentioned.
Also, you can get an app that is aptly named Xperia Flashlight which gives you a widget that allows you to toggle the light on/off from the Home screen. I have used this instead of having to go into the Camera Settings every time I want to use it.