Ubuntu contains an application called 'USB-creator' (use apt-get or other package management application to download it from the repositories) which can copy an Ubuntu based LiveCD to an USB drive automatically and make it bootable. USB-creator can use the currently running LiveCD or a specficied '.iso' image, and provides for a option for persistant storage using a read-write file on the same partition as files from the CD (some systems use a seperate partition).
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Detailed instructions are here: http://dev.laptop.org/~probono/sbuntu/
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There another application UCK (Ubuntu Customization Kit) which can be used to remaster a LiveCD image to remove/include applications, change the artwork etc....
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There is a Ubuntu Wiki article which walks though the stages of modifying a LiveCD image http://help.ubuntu.com/community/LiveCDCustomization