Intro
Some time ago use of iPhone and iTouch as a USB flash drive, seemed impossible,but only through from Applicataion fromthe iTunes Store, in conjunction with a third party software.
But now that Jailbreak is legal in the US (for now) it is possible to perform such feat, with no additional software.
Prerequisitives:
A jailbreaked iPhone or iPod Touch
USB Drive via Cydia: http://apt.dmytroe/ The site must be accessed from the device!
Implemetation
USB Device Drive creates partitions on the device which are then used as free space.
Once installed.
The three modes available: