what do I have to do, to paint walls that have flaking paint and cracks?

There's a long answer about this here...

http://answers.yahoo.com/question/index?qid=20080318070341AA30mmQ

Basically he says sand back as much as you can - fill the cracks - prime with diluted paint (several times) and then apply the finish coat(s).

Do NOT use PVA because it will stop the paint adhering to the plaster properly and be prone to peeling & flaking just like you have now...

Dilute PVA will create a waterproof membrane on the wall and the paint will not adhere to it properly.

Good luck...

Peccavi
February 2009