I think there its going to be a while before windows 7 is hacked for USB drives.
The big problem is that when you install a copy of Windows, its linked directly to a few things on your computer. Main drivers, like motherboard and hard drive. This kind of makes a problem when you try to move windows from one computer to another.
It should be possible to install Win7 on a flash drive from the setup program. The problem is, after you remove it from your computer, and try to boot it elsewhere, you'll get a bluescreen with an error about something like "Device not Mountable". It tries to mount your HD, scans your computer, and poof...it doesn't work anymore. The same thing happens if you copy a partition from one HD to another. Thats one of the big reasons you almost always have to always reinstall windows after installing a new motherboard. I've even had it happen when going from a p4 to a dualcore processor.
Hope that helps :D