A lighter fly-wheel allows the engine to spin up more quickly. This allows for the power to go from engine to drive train more quickly.
A heavier fly-wheel takes longer to spin up, and thus slows the engagement of the drive train.
Note that in both cases the difference is negligible and may not even be noticed.
Now, on the top side...
Once the engine is at full rpms the heavier fly-wheel will remain moving longer than the lighter fly-wheel. This means that you can actuall coast a little on the top after letting off the gas. The lighterer fly-wheel tends to slow quicker and require more hits on the throttle to keep it up there.
As for more torque or power, the only way to get more torque from your engine is to change the gearing. Your engine will generate so much torque at a certain rpm....this is fairly constant dependent on the rpm. Meaning at 20000rpm the torque output is one number, and at another rpm it may be the same number or another...but it will remain the same for that number.
As your engine gets older and the internals get worn, you will see the "power" drop off as the engine tends to lose compression and "slip."
edited to include corrected information...what was I thinking? Thanks Krusty for the catch.