I was just thumbing through the December issue of Australian Personal Computer Magazine, and they have a feature on the use of USB sticks. One part is on bootable Linux distros and Windows tools on your USB stick. Here listed:
The bootable rescue USB memory key is a convenient replacement for rescue CDs, enabling you to boot a system if the OS has failed. Go to our website for screen-by-screen instructions on how to create a bootable rescue disc.
USB computer in your pocket
Chubby Puppy Linux 1.0.5
Damn Small Linux 1.5
Feather Linux USB Edition 0.7.4
SLAX Popcorn Edition 5.0.6
The bootable Linux USB memory key lets you carry a perfect little PC environment in your pocket. It boots into a proper OS, with its own desktop and applications, for you to use on any computer with a USB port. Go to http://www.apcstart.com/usb/ for screen-by-screen instructions on how to create a bootable USB drives.
taken from the APC DVD
It's nice to see the mainstream media are sitting up and taking notice.
P.S. In the magazine, the editor said that his favourite distro of the list above was Chubby Puppy.