Hi Karanbir,
Personally, I hate images. Provisioning from fresh is easy enough, fast enough and manageable enough that images are almost always either the wrong solution or a by-product requirement from a third party tool that does not understand provisioning ( hello, all those so-called-cloud solutions .. )
well, there IS at least one valid scenario, where you want to deploy an image in an environment not supported by anaconda/kickstart. A prime example is the ALIX mainboard series, where the boards usually come with soldered 128 or 256 MB RAM, CF Flash Reader and a AMD GeoDE processor.
I had fun rebuilding anaconda once to even bootstrap those (AMD GeoDE is somehow falsely recognized as i586 by CentOS 5.7), just to find out I had to add an additional USB key for swap to even get it to install. ( see http://bugs.centos.org/view.php?id=2552 for details )
There are ready-made CentOS images for these type of boards available on the net (ssh keys removed ;-) ) and these actually allow for an easy provisioning of the CF cards.
Sadly CentOS6 does not even support the processor any more.