This has already been covered a couple of weeks ago. I thought I'd read it in at least one other review as well.

USB flash? NO.

http://www.androidtapp.com/tag/nexus-7-usb-drive/

Plus it would be quite the ugly hack. Do any Android devices support externally-connected flash memory (SD, microSD) as a transparent extension of their on-board storage? I didn't think any did.

The 8GB model is to prevent hemorrhaging money on the entry level product instead of simply losing money.