I am not sure whether it is supported to install from USB disk.  If it is not
supported, feel free to just close this bug with a short comment but I think it
would be quite a valuable feature to be able to do so.

What I did:

- copied the whole inst-source firectory from ftp to a USB disk

- installed a boot loader on the same disk with

- booted from this disk for installation

First minor issue occurs here: Within the boot manager USB disk or hard disk is
not selectable.  So I selected CD-ROM to make linuxrc fall back into manual mode.

- started installation from USB disk.

Installation run perfectly sane until reboot after installing all packages.

After the reboot the init scripts failed with a myriad of error messages.

I could not read all the messages but it seemed to me that he had problems
finding the USB disk again and thus rest of installation completely failed.

Installing from CD-ROMs on the same system worked flawlessly.

I currently have not saved all the log files because I was not sure whether you
are willing to fix that at all.  If you are willing to fix this and need more
information, I could try the same with beta2.