Making a Live Thumb drive boot with Persistent files, settings AND *drivers* that load on boot?

"Recient USB-2 flash-drives are fast and robust enough to boot and run linux directly.
It is not necessary to use a 'live' or cow (copy on write) system. You can install Linux on the USB/flash drive just like is was an internal ide/sata drive.
A $20-$30 flash drive (4-32 GB) should work fine. I've been using an 8GB flash-drive for Debian Lenny for several months now. It's nice because I can carry my entire environment around in my pocket.
Of course, your bios has to be capable of booting from USB (your Inspiron 1525 is probably ok). Depending on your installer, you might have to fiddle a bit to get grub installed correctly on the MBR of the USB drive....
grub

device (hd0) /dev/sdb
root (hd0,0)
setup (hd0)

I like the ram-disk idea. I will try that (on a machine that has at least 2GB). I forgot to mention the noatime option on your root filesystem. This can significantly improve performance because flash-drive are slow to write."