I came across this product from fingergear - computer on a stick. It's a USB flash drive that is ready to go as a full computer with the OS and all files preloaded. I was trying to do this myself but I couldn't get the partitions to be protected and secure and I found the COS and it has it all pre-loaded. I guess I'm just not good enough as a linux hack to set it up right. I keep erasing my OS! Has anyone heard anything about it? I'd like to get it but I want to check it out first.
http://fingergear.com