Method #1: This method is simple.
Read the TechNet article, it’s really simple: http://technet.microsoft.com/en-us/magazine/dd535816.aspx. The article describes how to format your USB key, and how to make it bootable. It’s a five minute process. It does require a installation source such as a CD or ISO.

Method #1: This method is even simpler.
Just a few days ago a even simpler tool was released. The Windows 7 USB/DVD Download tool allows you to create a copy of your Windows 7 ISO file (even end users can buy ISOs) on a USB drive. To create a bootable USB drive, download the ISO file and then run the Windows 7 USB/DVD Download tool. Read more and download here