My problem was with setting up ubuntu on the usb stick ready to be installed on a machine without optical drives. I was using my nokia E50 to act as a USB stick but never managed to get it to setup correctly. I guess it didn't like being formatted to fat and set as bootable (though the memory card uses fat, puzzling enough). I am quite intrigued as to why it wouldn't work so might pursue the issue again one day.
I discarded the idea and instead opted for installing it over the network using PXE just to find out a the brand new machine doesn't support booting a network resource (or even usb - there is no mention of either in the bootup devices options in the BIOS).
In the end I simply added the hard drive with ubuntu on there to the new machine. Linux is amazingly flexible - apart from the xserver it didn't even complain!
Good luck on your USB distro endeavors