I found a bootable disc image smaller than 10MB which downloads the packages on the machine on which they’ll be installed, rather than having to burn them onto a disc and then run them. However, this method of installation also allows the user to only select the packages they want to download, which potentially dramatically reduces the size of the download.

This small disc obviously uses a text-based installer. Whilst this isn’t quite as user friendly, it ensures compatibility and can be used in many scenarios in which the alternative installation CD would currently have to be used.

Discs are available for 32-bit and 64-bit installs on PCs; 32-bit PowerPCs and patchy support is available for Sparc and 64-bit PowerPCs.

This seems like a much better way to install Ubuntu, because one can avoid pointless packages and the time needed to burn the 700MB image!

The article gives a 14 pages tutorial on how to create bootable windows operating system on a 256 MB usb stick. You can of course use a bigger one and add more utilities that you need (like true crypt for example). Everything is well explained, you should not encounter lots of problems.