Since version 8.10, Ubuntu began including a live USB creator that allows you to install Ubuntu on flash drives. The official live USB creator is made to be run only from Ubuntu. So if you are looking for a Windows tool, here is Live uSbuntu Creator.
Live uSbuntu Creator can do all that the official live USB creator does and more. However, unlike the official tool that has support from version 8.04, Live uSbuntu Creator only supports newer versions – 8.10 and above. Apart from Ubuntu, other supported variants include Kubuntu, Xubuntu, Linux Mint Edition 6 and CrunchBang Linux Standard Edition 8.10.02.
Creating a bootable live USB consist of 5 simple steps
Step 1: Start the program and choose a USB key in the list
Step 2: Select the ISO image or CD of Ubuntu 8.10 or 9.04
Step 3: Choose the size of the data and programs to be stored. Normally, on a Live CD or Live USB you lose all your data when you shut down the system. The persistence of data keeps the data and user preferences. These data are stored in a file from the system entirely transparent to the user.
Step 4: Check the options you want to use which includes an ability to hide files on your stick and "allow windows to launch" that allows you to launch Ubuntu directly under Windows without restarting, made possible by virtualization.
Step 5: Start the installation.
[via Ubuntu Geek]