All Windows starting from XP has feature of burning files to optical Media. Now Windows 7 supports burning ISO images to physical media.
But stilll it lags creating an ISO image from physical media.

ISO Recorder is a small power tool for Windows which helps to create ISO image from a physical media.
It's very simple, right click the CD/DVD drive in my computer having a physical CD/DVD inserted and voila you have a context menu item "Copy Image From CD/DVD" "Copy CD to CD" etc.

for more information look at http://isorecorder.alexfeinman.com/isorecorder.htm