bit of light reading explaining
http://www.uucmotorwerks.com/flywhee...orque_loss.htm
Something people seem to overlook is that the flywheel doesn't affect the amount of power an engine puts out. All it does is affect how fast that engine can accelerate. And the RULE is that for a given amount of power, you can accelerate a smaller mass faster, given the same diameter and all that good stuff. There's really not much to debate on that, it's how it is. The engine will gain RPM faster, and it will also lose it faster, hence the idea that it hurts low end power. You loose the large amount of energy available in a heavy spinning flywheel, so when you dump the clutch at the line, the RPMs drop more than they would with the stock flywheel.
If you had two cars with the same weight, engine, trans, blah blah, with one having a 6 lb flywheel and the other having a 20 lb flywheel, one would probably be more consistant at the starting line if you're the drag racing sort, But if you started both at 1000 RPM in first gear and floored both cars, you better put your money on the 6 lb flywheel.
The deal about what you want to do with the car is very true. Someone driving to and from work in stop and go traffic will appreciate a flywheel with a little more mass than the guy that trailers his car to the road course.