This one is really cool, I couldn't resist sharing it to you guys.
And I copied it from http://www.linuxforu.com/tips-tricks/install-linux-straight-from-an-iso/ :)

Now, let’s assume you have downloaded a new version of a distro and are in the mood to try it out right away. It’s past midnight and you realise that you’ve run out of blank CDs/DVDs. So you will have to wait till the morning when the shops open, to be able to burn the distro image in order to install it. I’m sure a lot of us often face this problem. In this article I’ll share a simple trick by which you can install the new distro without burning it to a CD/DVD. The only requirement is that you should have a pre-installed GNU/Linux system—which you already have, I assume.

All Linux installers use two files to boot a computer: a kernel and an initial root filesystem—also known as the RAM disk or initrd image. This initrd image contains a set of executables and drivers that are needed to mount the real root filesystem. When the real root filesystem mounts, the initrd is unmounted and its memory is freed. These two files are named differently in different distros—refer to Table 1 for their names.

Names of kernel and RAM disk images in some popular distros

Distro                            Kernel path                        RAM disk path
============================================================

Fedora                         /isolinux/vmlinuz                    /isolinux/initrd.img
RHEL5/CentOS5           /isolinux/vmlinuz                    /isolinux/initrd.img
openSUSE                   /boot/i386/loader/linux          /boot/i386/loader/initrd
Mandriva                       /i586/isolinux/alt0/vmlinuz      /i586/isolinux/alt0/all.rdz
Ubuntu                         /casper/vmlinuz                     /casper/initrd.gz
Debian                         /install.386/vmlinuz                 /isolinux/initrd.img

The first thing you need to do is place the ISO image(s) inside a directory. Some installers are not able to read the ISO images if they are placed inside a directory. So, just to be on the safe side, place them in the root of the file system. The partition on the hard disk holding the ISO files must be formatted with the ext2, ext3 or vfat files system.

In our example, let’s go ahead and do it with an old Fedora 9 ISO image. Follow these steps to begin with:

# mkdir /fedora
# cp /home/Fedora-9-i386-DVD.iso /fedora/fedora9.iso

Now extract the kernel and initrd files from the ISO image and place them in the same directory in which you placed the ISO. You can use File Roller, the archive manager for GNOME, to extract the files. Just right click on the ISO and select “Open with File Roller”. It displays the contents of the ISO image. Then navigate to the isolinux directory—in Fedora 9 these two files are placed inside the isolinux directory; it’s often different for other distros, so please refer to Table 1 for the paths. Select the kernel and initrd files, and extract them to the location where your ISO image exists.

The second method is to mount the ISO image and extract the files. Run the following commands to do this:

# mount -o loop /fedora/fedora9.iso /media/iso
# cd /media/iso/isolinux
# cp vmlinuz initrd.img /fedora/

I have mounted the ISO image without providing the -t iso9660 option (to specify the type of media as an ISO filesystem). It worked for me. If the above mount command doesn’t work, do add this option along with the rest of the mount command above.

Note: Fedora 10 has introduced a change in the Anaconda installer. So, in addition to the vmlinuz and initrd.gz files, you will also need to copy the images/install.img file, create a directory called /fedora/images, and place the install.img file there.

Now, it’s time to edit the /boot/grub/menu.lst file on the system I’m currently using—Ubuntu 8.10. Note that this is the location of the Grub menu in almost all distros, except for Fedora/Red Hat, where it’s called /boot/grub/grub.conf. Append the following entry there:

title Install Linux
root (hdX,Y)
kernel /distro/Linux_kernel
initrd /distro/Ram_disk

In this case…

1. ‘title’ is the name you want to display in your GRUB menu
2. ‘root’ is the hard disk partition that contains the ISO image
3. ‘kernel’ is the Linux kernel
4. ‘initrd’ is the initial RAM disk image

Likewise, the menu.lst entry for the ISO file looks like what’s shown below:

title Install Fedora 9
root (hd4,0)
kernel /fedora/vmlinuz
initrd /fedora/initrd.img

Now you are ready to install your new Linux distro directly from the hard disk without the need for a CD/DVD drive. Reboot your system and select the ‘Install Fedora 9’ entry from your GRUB menu.