I have a Nexus 5, and I can confirm the flashlight is available in the system tray icon. This is true for all Google phones since at least Nexus 4. It is my understanding that AOSP as well as Google's Android implementation has always exposed access to the flashlight hardware (although somebody mentioned this not being the case with Nexus One).
Since it's not an app, but hidden under edit in the pull down notification tray, people may still end up looking for a flaslight app. Perhaps a warning in the Play store that "You already have a flashlight, it's here..." would be a good comprimise? Although that might be considered "MS pushing IE", because the Flashy flashlight app has features(tm) (omg blink S.O.S., gotta have that :s).
