I have tried the steps outlined in the replies above (and didn't have next word prediction selected) and this still won't stop. Here is my quick back story.... I use handcent messaging, if that makes a difference. I downloaded Light Flow (the free version) and used it for at least 8 months to provide different colored notifications for things like gmail, sms/mms, missed calls, etc... I found that it got buggy once or twice and just uninstalled and reinstalled it to get rid of the issues. Today, my phone started blinking yellow, which isn't even a color I used with light flow, so I uninstalled it and tried another app, Blink. I didn't like that one because it didn't allow a color choice for emails, which are the majority of my notifications, and it also didn't get rid of the yellow blinking, so I also got rid of that one.
Several hours later, what I have noticed is that it only blinks yellow when I turn the screen off. If the screen is on, it doesn't do anything, but as soon as I turn it off, it starts blinking yellow and doesn't stop. THE RESOLUTION: I did a battery pull (after uninstalling light flow and blink) and the yellow light went away. I sent myself an email from my computer to test, and as soon as the email came through I got a green blink (good thing!), so the bottom line is.... try a battery pull first before anything else. Why do I always forget these simple things?!?