We already posted about UCK (Ubuntu Customization Kit) which is an application for creating a
custom Ubuntu Live CD, but it doesn't have as many options as one would expect and it only runs in Ubuntu, as an application.
One of the most mentioned ideas at Ubuntu Brainstorm is creating a custom installation/live cd website-as-service which would allow users to customize their install/live cd, in the spirit of Linux and open-source in general.
A service like this already exists:
Reconstructor, a web based GNU/Linux distribution customization and creation toolkit. It allows for the customization of the Ubuntu and Debian GNU/Linux distributions. Customizations include boot logo image and text color, wallpaper, themes, icons, applications, and more.
Reconstructor is free to use. Even though it says certain services cost actual money, every user starts with a $5 balance and gets $5 each month which is enough for building and downloading your custom Ubuntu / Debian distributions.
More info on this.
More about Reconstuctor and how to use it
Once create your free account and log-in, you can choose if you want your Ubuntu / Debian with Gnome, KDE, XFCE or text only:
And then you get to edit the actual packages that come with your custom Ubuntu / Debian Linux distribution:
Under the "Modules" section, you can edit the default theme, upload custom .deb files, change the default icons and wallpaper, boot menu and even create custom GConf keys (among many other options):