There may be better suited solutins to deply websites than using an installer. For one, there's Web Deploy.
It's main purpose is deploying web applications to IIS and it allows you to modify key configuration values through a simple UI.
Web Deploy works with deployment packages; a big zip containing your application and some meta data to help install it. On deployment it will diff the deployed site with the data in the deployment package to update existing files, add new ones and remove obsolete files.
You can build deployment packages directly from Visual Studio and/or from MSBuild, using your favorite build server.
Web Deploy works really well when you need to deploy often or when you have to delegate deployment to IT staff.
Customizing Web Deployment package is a bit tedious though, you may find a blog post I wrote about this useful.
For simpler situations, I recommend good version control practices and xcopy deployment.
If you tag what you deploy to your server, you can zip up the changed files since last deployment and copy those to your server.