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I think it would be great for newbies who hear about bitcoin and decide they want to try it.
USB stick is better than a CD because you could include a recent copy of Bitcoin (with most of the block chain), already configured, for Windows and Mac.
So the user plugs in the USB drive, double-clicks the bitcoin app, and they're up and running.
The seller would need to establish a reputation for no-viruses/trojans, no already-spent coins in the wallet on the stick, etc etc etc....
... all the stuff that newbies are probably to clueless to worry about anyway.
The value is both the "starter" bitcoins in the wallet AND the convenience of not having to download/install/configure bitcoin. If PayPal asked, I'd say that I'm selling bitcoin software on USB sticks, and that the bitcoins in the wallet are just there because you can't use the software without having a few bitcoins to start....