USB Linux installation enables you to install a portable Linux operating system on a flash drive or USB key no larger than your thumb. This portable Linux operating system can then be run from any computer that can boot from a flash device, allowing you to bring your operating system, desktop, applications, files, email, personal settings, favorites, games and more with you. It’s like having your own personal operating system you can carry in your pocket.
This tutorial enables you to install, boot and run Ubuntu 7.10 (Gutsy Gibbon) from a USB flash drive. In addition to installing Ubuntu to a USB device and then booting Ubuntu from the memory stick, this tutorial will enable you to automatically save your changes and settings back to the thumb drive and further restore them on each boot using a second “casper-rw” persistent partition. The tutorial was written for those already familiar with working from Ubuntu or another Linux desktop environment. If you do not have access to or prefer not to use a Windows computer, this Ubuntu Linux on a stick tutorial is for you.
Ubuntu 7.10 takes slightly longer to boot than previous releases. However, once it’s up and running, it performs much better than running from the Live CD.
Links: http://www.pendrivelinux.com/2007/09/28/usb-ubuntu-710-gutsy-gibbon-install/