I finally got USB working with Windows XP running as a guest inside VirtualBox running on a Ubuntu Jaunty host. First find out what the group id of the vboxusers group is:
$ grep vbox /etc/group
Then, enable the deprecated /proc/bus/usb inteface:
$ sudo gedit /etc/init.d/mountkernfs.sh
Add the following line after /proc is mounted, at the end of the do_start() function.
domount usbfs "" /proc/bus/usb usbdevfs -onoexec,nosuid,nodev,devgid=
This didn't work for me until I rebooted. There you have it.
You shouldn't have to edit /etc/init.d/mountdevsubfs.sh or /etc/fstab as some other internet sources have suggested.