In simple terms, a Vista install CD is just a bunch of files on a disk which is bootable. An ISO is just a copy of these files.
To get an install to run off a USB stick or drive you just need to have all the same files there, and have it bootable.
The trouble is, the bootable bit is the issue. Ive not yet found a simple guide to making a USB stick bootable as I will likely be installing a new OS onto a mini server with no CD drive soon. For the hassle it looks like its gonna cause you may aswell buy a cheap USB CD/DVD drive. Better still, just get a USB CD/DVD drive caddy and use a standard full size dvd drive.