Smudges can't create "lens flare" per se. Smudges will definitely effect the result (the effect might even be interesting) but it is unlikely to cause what we traditionally call "lens flare". Niether can any similar problem such as dust, fog, or mold that can grow internally.
Lens flare will show up as a chromatic bright spot, often times several spots. It is caused by the source of light, the sun for instance, being reflected internally against the lens elements until those reflections are picked up by the film/sensor. The chances of them occurring go up and the focal length goes down. Wide angle lenses have a higher incidence of lens flare than telephoto lenses. They also go up the narrower the angle between your subject and the light source.
To reduce lens flare, shade the primary element (the outer piece of glass) of the lens. A lens hood is designed for this purpose, but your hand or anything that can block the light will do.