Recently I checked the old idea to install Linux into USB stick directly, as into any other hard drive. This would be very simple and straightforward approach: just plug in USB drive, boot from the installation CD and expect to the /dev/sda (or similar) between devices during installation. Then direct the installation into that drive and tell the installer to leave other disks alone. The approach is not directly dependent from the distribution and looked very attractive for beginners.
Debian have found the attached USB drive and fully completed the installation. In only asked me a couple of times if I really do not want a swap. I said I do not (how reasonable is to have a swap partition even on 4 Gb USB drive?). GRUB, however, was not configured correctly: in device map and menu.lst the pen drive (/dev/sda) appeared as hd2 and the flash did not even think to boot. However all I needed was to correct the boot device name to hd0 in menu.lst. The attempt to get rid of hard-coded /dev/sda name in /etc/fstab (using the LABEL approach) was also fully successful.
OpenSUSE that we use at work was even smarter in the beginning: GRUB was configured correctly and it was possible to boot from the flash immediately. Just fstab needed corrections to get rid of hard coded dependencies, again. Also, both Debian and OpenSUSE installers configured the graphic and network settings along the lines of the hardware that they have found on that particular machine - so if the machines from where you will need to boot are different enough, it is necessary to switch into something like VESA manually afterwards (xdebconfigurator seems a magic curse for Debian).
Still, I find this experiment interesting. It seems that with very little additional effort various Linux distributions could support USB stick a rather specific (generic drivers must be chosen) but still 'just one more hard drive'. I know that some distros have the 'install into USB stick' item on a user friendly level, but it does not necessary work well either. While I do needed to discover and fix several nonsenses myself, there are a lot of web sites where installation into USB drive is described as something horribly more complicated (see Debian instructions, for instance).