Following on from my Directory of programs for USB drives, here’s another Linux offering, allowing you to run GNU/Linux from a USB pen drive:
You can carry GNU/Linux in your pocket with a functional, quick, and useful USB pen drive distribution. Pen drives are faster than CDs, and the small distros that fit on them don’t require huge amounts of memory for the operating system and applications.
Slax is a powerful and complete bootable distro based on Slackware, equipped with kernel 2.6, ALSA sound drivers, Wi-Fi card support, X11-6.8.2 with support for many GFX cards and wheel mice, and KDE 3.4. Slax uses the Unification File System (also known as unionfs), which enables you to write whatever you want into the pen drive. Bundled software includes KDE, the KOffice office suite, GAIM for chat, the Thunderbird email client, and the Firefox Web browser.
Slax comes in a variety of versions. You can get a minimal version of Slax called Frodo, without big applications, that fits in 41MB, or choose among the 200MB standard editions such as Killbill (which I use) or PopCorn.
I must confess I haven’t tried this, but it sounds a great alternative.