Although this is truly a hardware issue, I haven't seen documentation anywhere and many OSX Hints readers may encounter this in the future (if you are lucky!).
My school district department was fortunate enough to be able to purchase two xServes recently. Upon setting them up at the end of last week, we were frustrated because the USB ports weren't working at all, and we weren't in the mood to set them up headless. We were about to send them back when our local Apple System Engineer let us in on the secret: If the removeable drive bays are locked, the USB & Firewire ports are disabled.
I'm sure Apple had a security issue in mind when they did this, but it immediately brings up two thoughts in my mind.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20020821094912461