I hear it was for good reasons. Their house show matches against one another (they had a couple in late '91) did terrible and so Vince feared the match wouldn't be as big of a draw as some had hoped and pulled the plug. The other reason was that Hogan was getting grilled in the media due to the steroid scandal firing up and so it was suggested he take a long vacation after Wrestlemania 8 to let things cool off. In that case, winning the title from Flair was a no go, as was any ending that had Flair retaining the championship, be it Flair winning or the match ending in a no contest.
If Flair had came into the company in '88 like he stated nearly happened in his book, then the match almost certainly would have happened at Wrestlemania 5 and no doubt been a much bigger deal then since both Hogan and Flair was closer to their prime. There was even a big news story on TV that same year talking about how huge a Hogan/Flair match would have been.