First off, dj, don't jump to panicky speculations and conclusions.
It's not clear just what you mean by "discoloration" (or how large its area might be), but normal, benign (i.e., nonmalignant) variations in glans coloration, sometimes as a darker-pink spot, do occasionally occur. (Being a [gay] Intactivist, I pick doctors' brains on all possible aspects at every opportunity.) Granted, the discolored area's being dryer and flakier than others (I'm assuming by that that you are circumcised?) sounds unusual, as far as my limited knowledge goes (I'm intact). There are threads on this site about glans dryness and how to remedy it (which I suggest that you read), but I don't recall anyone's distinguishing among various areas.
So for your peace of mind, if nothing else, I feel that the best advice for you is to consult a urologist as soon as you can arrange an appointment. It's not impossible that he might, in turn, refer you to a dermatologist.
P.S. Bolton & dazzla posted while I was writing the above, so an added comment here: The glans of a circumcised penis will as a matter of course be dry (exposure to air and clothing, and without natural lubricant from the inner foreskin). Too-dry skin on any part of the body generally will flake off, sometimes quite noticeably. And, though there's both anecdotal and some debatable empirical indication to the contrary, most authorities quite logically believe that over time the exposed glans keratinizes (develops an inordinately thick layer of skin)...with or without masturbation, so that practice is very unlikely to be your problem. Masturbation will, however, obviously cause temporary changes in glans coloration, but it will not in and of itself be the cause of flakiness.
...Might perhaps make a difference in trying to understand your problem.
