Turn any USB flash drive or HDD into a bootable Windows 7 installer
In November Long Zheng - all around smartypants and good guy - released a handy tutorial on turning the PDC hard drive that Windows 7 was being distributed on at the time into a bootable installer. As luck would have it, he discovered that the process works with any old drive.
It's a pretty simple procedure. Create an active partition on your USB drive if there's not one there already. Mount your Windows 7 iso with a utility like Daemon Tools Lite, and copy the complete contents of the "disc" onto your drive. That's it. Reboot and force your PC to boot to the USB device, and you should be ready to install.
You should be able to pull the same thing off with Vista as well by following the same steps.