Are there Windows Phone 7 devices that have USB Host drivers so that my C# program can access data on a USB Flash Drive?
You won't find many phones of any operating system which support USB host.
USB really isn't suitable for mobile devices - the USB specification requires a 5V power rail which really isn't suitable for a phone and its battery to support.
If you need expandable storage, I believe there are some phones with micro SD slots available (and there should be more of these available in the future) - although there are some restrictions about these - they're not really removable - see http://support.microsoft.com/kb/2450831.