ArchLinux 2008.06 "Overlord"
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ISO files are standard CD-burnable images.
    - Can be burned to CD(RW) media using most CD-burning utilities.

IMG files are full disk images.
    - Intended for use with USB thumb drives.
    - Can be raw-written to a drive using 'dd' or similar utilities.

Further documentation can be found on-disk and on the wiki.
Enjoy!