xorg.conf is, for all intents and purposes, no longer there. But there is now a directory, /usr/share/X11/xorg.conf.d/, that keeps configuration options for x.org.
A side note: In 10.04 Lucid, the directory is /usr/lib/X11/xorg.conf.d/.
To invert the mouse movement:
Create a file /usr/share/X11/xorg.conf.d/50-invertaxes.conf
to create this file, you need to gain root privileges. Start your favourite text-editor like this: gksu gedit. This will prompt you for a password.
alternatively, you can type this into a Terminal:
sudo nano /usr/share/X11/xorg.conf.d/50-invertaxes.conf
Put the following into the file:
Section "InputClass"
Identifier "Invert Mouse"
MatchProduct "The name our your mouse in xorg"
MatchDevicePath "/dev/input/event*"
Option "InvertY" "true"
Option "InvertX" "true"
EndSection
Where you replace "the name of your mouse in xorg" with the real name as detected by xorg.
to find out what Identifer you need to use, open a terminal and type
xinput list
this will produce output similar to this:
⎡ Virtual core pointer id=2 [master pointer (3)]
⎜ ↳ Virtual core XTEST pointer id=4 [slave pointer (2)]
⎜ ↳ Logitech USB Receiver id=10 [slave pointer (2)]
⎜ ↳ Logitech USB Receiver id=11 [slave pointer (2)]
⎜ ↳ SynPS/2 Synaptics TouchPad id=14 [slave pointer (2)]
[more...]
From there I can see the Identifier of my Logitech mouse, Logitech USB Reciever.
To be able to keep this configuration, you will have to have set up your Live USB drive with "Persistent storage":

Enable the option at the bottom, "Stored in reserved extra space", before creating your new USB startup disk and your settings will be kept when rebooting.