I had the same issue as described in this Bug when trying to boot a EEEPC 701 
using a USB key.
I have then tried the "today's ISO" jaunty-desktop-i386.iso as Steve Langasek 
suggested. -> It works fine!

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casper USB media fails to boot: USB storage device not detected, drops to 
(initramfs) prompt
https://bugs.launchpad.net/bugs/363038
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