I used Ubuntu's Startup Disk Creator to make the Live USB, for recovery purposes, and update it often. I have also installed additional software from Ubuntu's Software Center.
If I use that same Live USB to install Ubuntu on a machine, will it also install all updated and new software or will it just install what came in the original image?
if you install packages to the usb with the Persistence mode then use the installer it will NOT as far as i have seen Install the new packages to the installed system.
For example, you make a live-usb with persistence and install the nvidia drivers. Then boot the usb in a nvidia laptop it should run fine. However when you install to the laptop the nvidia drivers will NOT get installed to the new install.
This is both a good thing and a bad thing. It would be nice if you could install the extra packages, however there may often be cases where you would not want an exact copy. (on an pc using ATI video chipset for example)
There are ways to 'remaster' a live cd to include extra packages. This remastered live cd, could then be used to make a live flash that would install the extra packages also.
In the example above (about nvidia drivers) i should point out that i have had issues in the past with the Persistence mode actually using the drivers. I had to alter some things to get them to start up properly. I have not tested how well this works in 11.04 yet. I normally install the nvidia drivers to a Persistence mode flash drive in order to make installing easier on my nvidia machines.
When you say update it often, do you mean you run Update Manger, or you download and install a new ISO? You are most likely running in Live USB mode, which means all changes to the original image are discarded after you shutdown. So to answer your question, no, anything you install from (e.g, Software Center, terminal, synaptic.) will be discarded after a system shutdown, unless you are running the USB in Persistence mode.
Persistence mode may be what you want. Do note that you will need a healthy amount of free space available on the Flash Drive.
Open a terminal, and run the command
gksudo usb-creator-gtk
Choose your ISO, and the drive you wish to install to.
Choose stored in reserved extra space, and adjust the slider to the amount of space you want to use to store your changes. *****
***** Do note that the maximum amount of persistence you can add is 4GB.