WinToFlash can transfer Windows XP, Vista, and 7 onto a flash drive as well as Server 2003 and 2008. WinToFlash can also transfer Windows Preinstallation Environments to flash drive.
The process is simple and mostly obvious. You tell WinToFlash where the installation files you want to transfer are located and either let the transfer wizard take care of things, or specify settings like what kind of format the flash drive will undergo. In our test using a USB 2.0 generic flash drive it took about 12 minutes to turn a Windows 7 installation DVD into a USB-based installer.
WinToFlash is freeware, Windows only.