I have published small update to the USB Drive utility yesterday. There are few cosmetic changes in disk creation routine, progress bar was added and now cancellation of disk creation doesn't leave incompleted disk images on iPhone.
Few answer to the popular questions:
Q: Where disk images are located? I want to remove them manually
A: Check /var/Volumes. You can remove using "rm /var/Volumes/*" command from your favorite ssh client or terminal.
Q: How remove disk image?
A: Swipe on a disk name (slide from left to right) and tap "Delete" button
Q: I have uninstalled USB Drive but disk space was to freed
A: This is by design. You need to remove disk images manually. I will not automatically kill your data.
Q: It doesn't work under with Windows XP/Vista/Windows 7
A: If you have iTunes installed there is known problem regarding Apple Mobile USB driver. You can use workaround posted by limneos here. I am working on a better workaround, but this is the best at this moment.