Flip cameras store their video in a hi-def MP4 format -- however, this is not an AVCHD format and you will likely not be able to edit the video by importing it into Premiere Elements without converting it. (The video is actually stored in a proprietary MP4 codec called 3iVX.)
Version 9 of Premiere Elements includes project presets for working with Flip video. When you create a new project, go to Settings and select the appropriate setting: Flip Mino or Ultra, standard-def or high-def.
Versions of Premiere Elements prior to version 9 will likely have problems working with Flip video, however. In those cases, we recommend converting the video to a format the program can work with.
This free software, from NCH Software, will convert the MP4 files from a Flip camera into a more editable AVI.
Be sure to choose the AVI output option and, from the Encoder options, select DV Encoder (NTSC or PAL, as appropriate).
For NTSC DV video, also set the Output Options to:
Frame Size: 720x480
Frame Rate: 29.97
For PAL DV video, set the Output Options to:
Frame Size: 720x576
Frame Rate: 25
Where Prism falls short, however, is in producing 16:9 video files. The only options seem to be to 4:3. For producing 16:9 video, the better choice appears to be MPEG Streamclip, as described in this FAQ: