I wrote a blog a few weeks back on this subject that used Diskpart. This method is a little easier and without the backing music.
Download and install the Windows 7 USB/DVD Download tool then insert your USB pen and launch the application.
First, browse to your Lite Touch boot ISO file.
Next, click on USB Device.
Select your Flash Drive then click Begin copying.
It will then wipe your flash drive, after a warning, and copy the files.
You will get this error because you’re really supposed to use this on the Windows 7 DVD iso to make it bootable, so ignore the prompt.
And there you go! Couldn’t be easier. This tool can also make a DART recovery disk, apparently. Finally, Xtreme Deployment have a flash drive tool also. It’s located here.