I want to create Fedora 14 live CD with additional packages. How to do it?
First get the default all installed and your USB device booting. Then boot it up, and modify it however you like. It should retain any changes.
To author a new CD iso, you would have to look into building the entire distro yourself which is considerably more complicated. Since your subject line and tags include usb, I assume that's what your actually after.
I note my application is slightly difference in that I am creating installation media and not a livecd, but some of this is likely to apply.
You will need to use the tool createrepo to alter the repodata on the CD. To have them preinstalled you will probably need a kickstart file - ks.cfg, and you will need the isolinux.cfg file to pass ks=...ks.cfg location to the kernel on boot (in an append line).
Make sure you have a VM to try out your ISO's on, before turning it loose on real machines - it'll take a few attempts to get right. With the kickstart file you can set usernames, passwords, packages as well as have post installation scripts in bash or python.
As others have suggested, you need to build your custom Fedora ISO using kickstart preloaded with your rpm packages of choice. Adding packages is as simple as appending them to your kickstart file. After that open the stock Fedora ISO using ISO master, replace the kickstart file and save the new ISO as a different file. The final step is to install the new ISO onto your USB the way you normally do.