It is possible to boot a Cisco router off of a USB flash drive. This can come in real handy if you are on-site and the compact flash of the router is bad. Here are the steps to do it: [more]
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Format your USB flash drive with a FAT file system. This needs to be FAT and not FAT32.
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Copy the system IOS image to the USB flash drive.
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While the router is powered off, plug in the USB flash drive to the USB port on the router.
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Power on the router and when it starts to boot up press the Break key to enter ROMMON mode.
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Once in ROMMON mode enter the following command to boot to USB:
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boot usbflash0:<system image file name> (e.g. boot usbflash0:1841-advsecurityk9-mz.124-23.bin)
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The following link has some more information about what is supported: http://www.cisco.com/en/US/prod/collateral/modules/ps6247/prod_qas0900aecd80232483.html