USB sucks
I'm using it at this very moment for what is, I grant you, a rather unusual project.
Scenario. I have a PC with a CF->IDE "drive" and no optical drive. Normally, I would simply boot and install ubuntu off a USB key but for some reason this mobo refuses to boot Ubuntu in said manner. It is apparantly a BIOS problem (according to some googling)
I want to install ubuntu to an 8GB flash card in that server.
Anyway, my workaround is to stick the CF card into a USB card reader, fire up vmware workstation, build a VM with "Use a physical drive" instead of a virt disk and point that at the CF card.
The process ultimately works fine. I can install the OS to the card, remove it and then boot it in the IDE CF drive bay all without problem.
However, during the installation process using vmware, the PC becomes unusable. It locks hard (including mouse pointer) for minutes at a time. The first time it happened I almost did a hard reset thinking it had hung completely. Eventually it came good in spits and stutters but I had to walk away for over an hour until it was finished. An install which normally takes about 25 mins took 4 times as long and the host PC was unusable during the process.
I've done similar installs using this method in the past using non usb drives without this problem. The problem is the USB interface. It is too CPU dependant. This makes USB cheap to produce but does not make it good.