Do you own a Netbook without a CD/DVD drive, but want to install Windows 7 on it? No problem! Microsoft has made available a tool known as Windows 7 USB/DVD Download Tool, which takes an ISO image and creates a bootable USB device that can be used to install Windows 7. The utility can create a Windows 7 installation DVD from the ISO file as well.
Update (Nov 10, 2009): Microsoft pulls download tool over GPL violation accusation
Download Windows 7 USB/DVD Download Tool from Microsoft Store Website. To copy the ISO image to USB flash drive, ensure that the drive has minimum 4 GB of free space.
The tool works only for the Windows 7 ISO image downloaded from online Microsoft Store. It throws the following error if you use a custom Windows 7 ISO image.
However, Rafael Rivera of Within Windows has written a tool that will allow you to use your own ISOs with the Windows 7 USB/DVD Download Tool. For more information, read the excellent post Use the Windows 7 USB/DVD Download Tool with custom ISOs by Rafael.