this has always been a concern for me and it is especially noticeable in clothing like pajamas. the smell is disgusting and the chemical component is disturbing at best. yes, i want to prevent my clothing and such from going up in flames, however, i don't have any interest in breathing in the toxic compounds that the items have been treated with. yuck!
Follow your nose. Don't live with anything that smells offensive to you, chances are it's not that good for you.
HealthyStuff.org has a bunch of tests on various things, including cars (you know that "new car smell"? not good). BTW, on their car tests, flame retardants show up really well, phthalates (=plastic softeners) less so. For the latter you just have to trust your nose.