CE560 Captain reports aircraft climbing when flaps are extended with the autopilot engaged in altitude hold mode and the approach armed. The autopilot is disengaged and the approach resumed manually.

Narrative

Flying in VMC conditions on the ILS 19 TEB at 2;000 FT 1-2 miles outside glide slope intercept. Approach armed; localizer captured; glide slope full scale deflection above with glide slope capture armed and ALT hold the current vertical mode at 2;000 FT. Flaps were moved to approach and at some point there after the airplane began to quickly climb. I instinctively pressed the formerly called 'TCS (touch control steering)' button and pushed the control yolk forward to stop the climb. This leveled the airplane; so I released the TCS button to vertical speed back down to 2;000. As soon as I released the TCS button the airplane began to climb again. I then pressed the autopilot disconnect button and the airplane reduced the climb rate confirming to me the autopilot was definitely engaged throughout the event. I hand flew from 2;300 FT back to 2;000 FT and then the rest of the approach. This happened as we left approach control to go to TEB Tower Control. No mention was made from ATC about any altitude deviation. I called Rockwell/Collins in Wichita; KS to report the event. They made a report and are looking into any other reported similar events.