I recommend also checking that you have the correct number of USB drivers active. Download usbcfg7a.zip from Hobbes and unpack it in some directory. After having activated the USB support (Ivan's piece of CONFIG.SYS above), run usbcfg and see that USB controllers found on your machine agree with your CONFIG.SYS. With Ivan's example, you get 2 OHCI, 1 EHCI in the CONFIG.SYS and the actual number of USB controllers on your machine. If these two data sets does not agree, you can put them in agreement from the program (your CONFIG.SYS will be modified, restart).
The wrong number of USB drivers activated is a frequent cause of USB device malfunction (mouse or keybard not working, USB stick not found, and so on).