When I raised the hood to check the oil I noticed the upper radiator hose was flattened out. It seemed like it filled out once the engine was running but aren't hoses supposed to stay round all the time?

 

I'd replace it then. Not like it would be that expensive or that hard to replace. Get a new hose, and a piece of mind.

 

Replacing it may not be the answer just yet, IMO. Something is causing it to flatten, and it seems there's a suction/vacuum in the system. May want to look into the cause before you replace the hose.
Unfortunately, I have no idea what would cause it.

 

could it be a water-pump related issue?

 

Usually happens if you get real low on coolant. Check that, if not already. Shouldn't be any other reason for that to happen, since the coolant system builds pressure when warmed up.

 

It is the radiator cap. They have a spring loaded valve to let air in when cooling.

 

radiator cap...hmmmm. The only cap on my cooling system is on the reservoir. So, you're saying that when the engine cools down, the pressure is relieved and the hose can collapse? I have a 97 T-Bird ( same engine), and never had this happen.

 

When the hot coolant expands it forces out air and when it cools the air must return. Your cap is bad so the hose collapses because of the reduced volume. Opening the cap restores the equilibrium.
It's the "egg sucked into a bottle" trick.

 

He doesn't have a radiator cap. It's a sealed rad with plastic resevoir.

 

The thingy that screws onto the expansion tank is still referred to as a radiator cap since it performs the same function as before: regulating pressure in the radiator and providing access for adding coolant to the radiator. The caps were moved to the expansion tanks when hood lines got lowered for aerodynamics and cross-flow radiators became common.
Water pumps are really coolant pumps, headlights are really headlamps, rear windows are really the backlights, etc. but people in the business recognize the names.