WinToFlash starts a wizard that will help pull over the contents of a windows installation CD or DVD and prep the USB drive to become a bootable replacement for the optical drive. It can alsow do this with your LiveCD.
You don't have to worry about scratches on the disc or misplacing your original media discs once you transfer their contents to the flash drive. The optical drive is quickly becoming a thing of the past, especially in office environments, as media is shifted to the cloud.
Not only does WinToFlash make the process about as easy as it can get, but it can also create Windows XP, Server 2003, and Server 2008 installers.
WinToFlash is a free download and is totally portable. It's an excellent tool to add to your USB-related utilities.