Peeling or flaking paint must be removed. On houses built after 1978, you can attack it with sanders, scrapers, or chemicals, as well as with heat, using a device like the Speedheater Infrared Paint Remover (about $600, Eco Strip
But on a pre-1978 house, the paint could contain lead, and heedlessly assaulting it will be harmful to you, your family, and your property.
When in doubt, test the paint, either with LeadCheck swabs, available at home centers, or by sending a sample to a lab, such as PRO-LAB
If the results are positive, your safest option is to hire a contractor who is trained and EPA certified in proper paint-removal procedures. (To find a pro in your area, go to U.S. EPA
Taking care of lead paint on a house is a pricey process, but there are no shortcuts when dealing with this toxin.