Yes, the flared front fenders prevent the side-facing ultrasonic sensors used by Parking Assist from being installed in their normal location. However, at least 1 i3 owner who installed S fender flares on his non-S i3 was able to relocate these side-facing ultrasonic sensors to preserve Parking Assist's functionality. I have no idea whether Parking Assist's functionality suffered with this modification.
Because a backup camera is now included on all i3's (i.e., the Parking Assist option isn't necessary to have a backup camera) and because Parking Assist hasn't worked particularly well for parallel parking (e.g., slow to park and wheels have been damaged), I would not pay for the Parking Assist option.