Further reading: Books and Sheet Music . . . jazz theory, improvisation, Irish pennywhistle tunes
Aebersold, Jamey. How to Play Jazz and Improvise. Vol. 1. New Albany, IN: Jamey Aebersold Jazz, 1967.
Cotter, Geraldine. Traditional Irish Tin Whistle Tutor. Ossian, 1998.
Gray, Nowick. "Nothing new under the sun: A musical mystery tour." Alternative Culture Magazine, http://alternativeculture.com/music/ragas.htm.
Levine, Mark. The Jazz Theory Book. Petaluma, CA: Sher Music, 1995.
Vallely, Fintan. Timber: The Flute Tutor. Dublin: Walton, n.d.
Werner, Kenny. Effortless Mastery: Liberating the Master Musician Within. New Albany, IN: Jamey Aebersold Jazz, 1996.
Wikipedia. "List of Janya Ragas." http://en.wikipedia.org/wiki/List_of_Janya_Ragas
Improvising with Rhythm
So far we haven't addressed the equally important aspect of improvising on flute: RHYTHM. Improvising with a backdrop of sounds of nature is one thing; but when jamming with other musicians there arise infinite options for weaving through rhythmic structures. Even if you haven't ventured outside the bounds of conventional Western music, there is much to be learned from the basic timing and rhythm structures of traditional West African music, which historically has provided the roots of blues, jazz, and rock.
At first glance you might think, "What does the flute have in common with the djembe?" Actually both could be considered lead, solo, or melodic instruments; so any of the patterns of the lead djembe, in the West African ensemble, could be considered as melodic models for flute improvisation.
For further study in these basic forms of rhythm and their many variations, I recommend my own Roots Jam - Drum and Percussion Rhythm Study Books.
Three books to choose from, by Nowick Gray.
Collected rhythms and resources for African and Afro-Latin hand drumming, dance and percussion; including audio, lessons, rhythm studies and exercises.