Possibly, a 2.5 gallon tank isn't all that big to begin with and most people will usually have only a colony of shrimp in there or some plants and no fish. How often do you change his water and how much each time?
If you can test your water and post the results that would go a long way towards solving the problem. Perhaps post a pic of your boy as well so we can see his body condition.
I don't really think ammonia burn would cause the fish to flash, but I'm not completely sure. If you can't visibly see anything wrong with him then try taking a flash light and shine it on him while his tank light is off. If you can see a gold dust-like sheen then the problem might be velvet.
For now, I would change about half his water every day or every other day, and maybe try adding some aquarium salt. Getting his temp up the about 78 should help as well. Usually heat, salt and water changes will cure most simple illnesses