You just need to specify that you want to save changes, and specify the size to allocate in the usb-creator interface - it's pretty intuitive.
I suggest you use the intrepid RC ISO image as the source to create the persistent image (people are complaining about the daily builds, unsurprisingly).
I've installed libdvdcss2 and some of the gstreamer0.10-plugins-* in order to play DVDs, so I can attest that installing extra packages works fine.




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