This isn't very hard. It took 10 minutes! (Not including buying stuff)! Easy, fun and a little nerdy!!!
(Use this method if you wish to save the electronics, otherwise...you can do this or the alternative method in the related section!)
Step 1: Get Stuff!!!
Knife (I used an X-acto Knife)
Heavy Duty Glue (Optional)
Cool Music (I suggest "Technologic" by Daft Punk)
I bought the USB Stick at Micro Center. Best Buy, Office Depot and Circuit City have them. Mine is 8 GB, any size will do.
The Controller can be found at a garage sale (parents can be soooo cruel!) or you might have one you don't need (Super Mario Bros. 2 player mode only needs one controller!). My dad used his eBay to buy mine.
Step 2: Disassembly.
Now, if you want the buttons to be "pushable" leave the padding there. I recommend this. Unless you want to house 2 USB Sticks.
Step 3: Cut Hole for USB
I cut the side so it would stick out (and wouldn't put the buttons in a "solid state"). I measured with a Sharpie and my dad cut it with an X-acto knife. Then we filed the excess off.
Step 4: Set in USB and other stuff-ums
You may need to file stuff to make a spot or just position it right. The I put pieces of cardboard to act as a cushion so the buttons can still be pressed.