Some LQ members are having a similar discussion in the Downloading Linux to flash drive
thread. It looks like a few folks are just getting started with this project at about the same time! Admittedly, in that thread, I could have been more clear on the specific point you're raising here, or refrained from commenting where I had little experience to contribute with.
I understand that you are likely limited to using recent distribution versions for such a purpose and may favor Ubuntu as a candidate, but just so you know some have found version 8.10 of Ubuntu to be less than stable in their experience. It might be worth reading the thread I'm in love
just to have a frame of reference.