Improving the hardware efficiency of deep neural network (DNN) accelerators with techniques such as quantization and sparsity enhancement have shown an immense promise. However, their inference accuracy in non-ideal real-world settings (such as in the presence of hardware faults) is yet to be systematically analyzed. In this work, we investigate the impact of memory faults on activation-sparse quantized DNNs (AS QDNNs). We show that a high level of activation sparsity comes at the cost of larger vulnerability to faults, with AS QDNNs exhibiting up to 11.13% lower accuracy than the standard QDNNs. We establish that the degraded accuracy correlates with a sharper minima in the loss landscape for AS QDNNs, which makes them more sensitive to perturbations in the weight values due to faults. Based on this observation, we employ sharpness-aware quantization (SAQ) training to mitigate the impact of memory faults. The AS and standard QDNNs trained with SAQ have up to 19.50% and 15.82% higher inference accuracy, respectively compared to their conventionally trained equivalents. Moreover, we show that SAQ-trained AS QDNNs show higher accuracy in faulty settings than standard QDNNs trained conventionally. Thus, sharpness-aware training can be instrumental in achieving sparsity-related latency benefits without compromising on fault tolerance.