How does Vista ReadyBoost speed up the PC , since FLASH drives are slower than HDD's?

"Well, ReadyBoost is really mostly of benefit for systems short of RAM (less than 1GB). Now that RAM is cheaper, ReadyBoost has really outlived its usefulness. If you have plenty of RAM, there's no point in using ReadyBoost.

Now, while a USB flash key is slower in sequential transfers, for an OS drive this is really irrelevant. Flash has a MUCH LOWER access time and THAT is why it benefits over a hard drive. We're talking about an access time of a few NANOseconds; the best the 7.2K drives can muster is an access time of around 12 MILLIseconds! For an OS asking for multiple small files ASAP, hard drives are pretty slow.

Still, from best to worst, here's how all active memory storage techniques stack up:
-CPU Cache
-RAM
-ReadyBoost Flash
-Hard Drive virtual memory (Swap File)"

Your OS is using your Hard Drive and so are you, so while it's actually transferring info faster, multiple threads accessing them make it slower.