No, seriously guys, squadron logos are horrible and disgusting and should never have been included ever. It's the main reason why FS2 wasn't as good as FS1, because the squadron logos for me completely ruined immersion which was something that FS1 was much better at, IMHO. So really, I dont think they should be included at all anymore, even if there's an option to disable them it means that most people will be using them, so really I think squadron logos should be removed altogether so nobody uses them because thats how I want it and thats the way it should be
Just because you do not like to have squadron Insignia, doesn't mean that everybody should be deprived of the option to have them on their games. I like the idea of having it as an option in the launcher, so that it leaves it up to the player to decide what he wants. And when it is disabled for you it is disabled in your game, so that if another player has it enabled in multiplayer you don't see his logo if that is what you are complaining about when you say "most people will be using them."
What if some guy in the world said "I think freespace is stupid, nobody should play this game ever" and so Volition said "ok this one guy says he thinks it is stupid lets do something else."

Okay, but srsly now, they do look kind of silly. More like giant 3 meter stickers than painted on insignia. 
Who says they have to be huge? A model can have an insignia that is pretty small, just big enough to be able to see it when you inspect the ship. It can be worked out to be like a texture and shape itself like the hull it sits on so that it isn't a very ugly thing to have. It is more of a neat little feature that says "hey look I am in the 70th blue lions" but not scream it.