How can I make a bootable Windows 7 USB in OS X Lion?

I want to make a bootable Windows 7 USB in OS X Lion. How can I do that?

You need a install ISO image downloaded from Microsoft and a USB flash drive with 4GB or more.

Per the offical Bootcamp Guide for Lion by Apple (see page 4):

You may be able to install Windows 7 with a USB flash drive that contains a Windows 7 ISO image downloaded from Microsoft. To check whether you can do so, open Boot Camp Assistant, click Continue, and see if the option “Create a Windows 7 install disk” is available. To install Windows 7 with a USB flash drive, you need the following:

• An ISO image of Windows 7 Home Premium, Professional, or Ultimate downloaded from Microsoft.
• A USB flash drive with 4 GB or more. Boot Camp Assistant erases the flash drive, and copies to it the Windows 7 ISO image and software drivers that let Windows work with your Mac hardware.

To see how much free space you need on your disk for Windows, refer to the documentation that came with Windows.