With HDD as large as they are now, it makes sense to maintain install sets - just copy the CD to your HDD. I have a directory called Install and under that are all my bits and bobs.
That is very much what I am doing
usually all the drivers get kept under an C:\\INSTALL or C:\\DRIVERS directory and get installed from there. That way if someone loses the install CD, they can pull the files from that directory off of their hard drive. That is, unless they deleted it to save room? :(
But it does come in handy to copy the /WIN98/ directory from the CD to the hard drive C:\\INSTALL\\WIN98\\ because sometimes the OS does not detect the CD-ROM after a reboot because it doesn't have the Motherboard IDE controller set up yet, D'oh! It is easier then to pull the files from the hard drive. Either that or set up a DOS CD-ROM driver and then pull it from there.
I think some big name computer companies use c:\\windows\\options\\ to store their cab files, driver files, etc on the hard drive.