I know this has been done before, but I'm posting this to show you how I did it because it ended up much cleaner.
Parts Cost = $4 for the USB Hub
The rest is free if you have it laying around.
Step 1: Parts & Tools
1 NES Controller
1 4 Port USB Hub This is the one that I used. It was less than $4.
Hot glue gun
Hot Knife or Exact-o Knife & Lighter.
Step 2: Destruction!
Cut that NES controller Wire. It's just in the way. Save it you may find something to do with it later.
Remove the screws from the back of the NES controller as well as the USB Hub.
Remove the screw from the circuit boards of both the controller and USB Hub. Toss the case or keep it for a later project. It does have a nice little USB holder on the back you may be able to reuse.
Now there is something wrong with the hub board so be GENTILE!
Step 3: FIX THAT BOARD!
This will prevent you from ripping them off of the PCB as easily.
Step 4: Modify the NES Controller
I have circled all of the parts that I broke or cut off.
The straight piece on the top is optional. I didn't cut it, so you don't have to. If you're having trouble this may be your problem.
The top two screw holes I melted down on the OPPOSITE SIDE OF THE CONTROLLER (not the one in the pictures). Just make sure you keep checking the back so you don't melt through it. I later filled these melted holes in the back with black JB Weld.
Place the USB Board where you want it to be in the controller and mark where it needs to be cut.
I cut on the inside of these lines to make sure it was as flush as possible. Too small? Cut a little out with your exact-o knife.
TIP: If you find that cutting it with your exact-o knife is too hard try heating it up with a lighter. It should glide through it like butter. Just BE CAREFUL!
Keep cutting until it fits. DONT CUT TOO LOW! There is enough room to cut out and make the ports flush with the top of this half of the controller.
Pull out the select/start button and cut off the top half of the button so it looks like the picture below.
Once it fits in there run your wire around the two grip posts and out of the hole at the top.
I glued the board down with hot glue at this point to make sure the ports would stay flush.
BE GENEROUS! Use as much glue as it takes, just make sure it doesn't go above the board.
This also prevents movement from USB cables being plugged/unplugged.
Step 5: Assembly/Further Modification.
After doing this I found that the buttons seemed really loose. So I opened it back up and put a big dollop of hot glue behind the buttons on the rear side of the case. Worked like a charm!
Now just plug it in and test it out!
Hope you enjoyed this tutorial!
NOTE: I have seen a mod on here that involved peeling the front sticker off and scraping the red paint off of the Nintendo Logo. If you're feeling adventurous you can do this and rewire the USB light right under the hollowed out nintendo logo. I think it would be pretty sweet, but just didn't feel like doing it. Maybe some other time!