Microsoft's TechNet magazine has posted instructions on installing Windows 7 from a USB key - which will be very handy for anyone installing Windows 7 on a netbook, in particular.
Installing Windows 7 from a USB key will also be faster than installing it from DVD.
Dennis Chung, IT Pro Evangelist at Microsoft, posted a video explaining the process.
Here, according to TechNet, is what you need to do:
1. You should already have DiskPart installed on your Windows machine - you'll use this to prepare the USB drive. If this free disk partitioning app isn't already already installed, you can download DiskPart from Microsoft.

2. Launch DiskPart by typing diskpart into the Start search box.

3. Now run the list disk command to check the status of your drive.

4. Next, run select disk 1 where the "1" is actually the corresponding number of your USB drive.

5. Now run clean.

6. Once that's done, run create partition primary.

7. Now you can make the partition active by entering active.

8. Next, set up the file system as Fat32 by running format fs=fat32 quick.

9. Enter the assign command to give the USB drive a drive letter - this will make it easier to access from Windows Explorer.

10. Drag and drop the contents of your Windows 7 installation DVD onto the USB drive to copy the files across.

11. Stick the USB key drive into the machine you want to install Windows 7 onto and boot the system from the drive. The Windows 7 installation will now begin.