Cool Flag Drop Effect

Hi I’m new to 3D modeling, Blender3D, and this forum. A couple weeks ago I saw a really neat flag drop animation on the main page (after the enter screen) of http://www.northkingdom.com that I am certain could not be produced through after effects, photoshop, or flash. How difficult would it be to reproduce this effect ( a flag/cloth dropping with proper physics) and is it even possible to do so in Blender3D. Thanks in advance for any replies from knowledgeable Blender3d gurus.

-Bharath

Video tutorial (8Mb):
(Do a save-as to save it to your box)
http://www.ibiblio.org/bvidtute/contrib/softcomp.avi

Will explain the basics.

GreyBeard