Over the past years, this conversation regularly comes up. It's a good time to discuss it again. I think either way, people are going to reformat them, it's what I do when I get media from others. But more importantly, two things come to mind.
First, branding is important. If we brand the usb with Fedora on it and our url or something (and not on the crappy usbs we use right now) that won't come off others will probably see it. Putting Fedora into people's minds is a good thing.
Second, if we can put live media onto it, it's an easy win. Like I said, the person is likely to reformat it, but if they are presented with the media as a drawing or by learning about the four principles, it's an overall win. Maybe they'll join Fedora, maybe they won't, but at least they learned a little about our project and might share it with someone else.
While writing this, I was thinking of another benefit of using usb sticks. At conferences and conventions it seems that there's a lot of 'challenges' being put forth. We could reward those who want to take the challenge with a usb stick, and the winner with something a bit nicer (t-shirt or hat or something more, possibly a nicer electronic gadget).