Here are three different ways to put Lion on a USB thumb drive. If
you buy and install Lion from the App Store it downloads all 3Gigabytes
from the App Store, installs Lion, then deletes the installer! So when
you go to install it on another machine it needs another 3Gigabyte
download! Here’s how to make a re-usable installer.
Option 1: Put a full bootable Lion installation on the USB Drive with a recovery partition.
What you need: an 8G thumb drive and OS X Lion from the App Store.
What you get: A USB stick you can boot off and repair your Lion installation from.
Download the Lion installer from Apple App Store. DO NOT INSTALL IT
ONTO YOUR COMPUTER OR THE INSTALLER WILL DELETE ITSELF. MAKE A COPY OF
THE INSTALLER. If you have already installed it and it has deleted
itself, go back into the App store and click on ‘purchases’ and next to
Lion it will say ‘Installed’. Now option-click on ‘purchases’ and
‘installed’ will change to ‘install’ so that you can re-download the
installer.
Format your Thumbdrive using a GUID Partition Table, and ‘ Mac OS
Extended (Journaled)’, then you can run the Lion installer and install
Lion onto the thumb drive.
More info here: http://support.apple.com/kb/HT4718
Option 2: Create a Lion Recovery Disk.
You’ll only need a 4G USB Drive for this option.