No, you don't need a floppy drive....except if you need to load extra drivers during install of Windows - the dreaded 'push F6 if you need to install other drivers.' If you DO need to install other drivers that are not part of the Windows installation CD Windows will look on the 'A' drive and, to my experience, ONLY on the 'A' drive for these. So, a floppy is required in this situation. Extra drivers are those needed for RAID controllers such as the Silicon Image 3132 Soft RAID controller on the MSI7100 board (K8N Neo4 Platinum SLI). There may be ways to make the motherboard recognize the USB system as the 'A' drive and use a USB memory device but I have never had any sucess with these.
As far as BIOS upgrades are concerned, you don't need a floppy (and you DON'T EVER WANT TO USE LIVE UPDATE FOR YOUR BIOS!!! see stickies above). You can use a bootable USB drive or a bootable CD drive (that's what I use).
Hope this helps.