Sugar on a Stick - Sugar Labs
http://wiki.sugarlabs.org/go/Sugar_on_a_Stick

OLPC OS

Sugar Labs offers ubiquitous access to Sugar in a USB (Universal Serial Bus) flash memory drive (stick). The Sugar on a Stick project gives children access to their Sugar on any computer in their environment with just a USB memory stick. Taking advantage of the Fedora LiveUSB, it's possible to store everything you need to run Sugar on a single USB memory stick (minimum size 1GB). This small USB device can boot into the Sugar learning platform on different computers at home, at school, or at an after-school program, bypassing the software on the those computers. In fact, Sugar on a Stick will work even if the computer does not have a hard-drive. With Sugar on a Stick, the learning experience is the same on any computer: at school, at home, at the library, or an after-school center.

Windows only: Free application uSbuntu Live Creator installs a Live CD from an ISO image onto your USB flash drive—much more useful, portable, and easy to deal with than carrying around a CD.

LiLi USB Creator is a free software for Windows that allows you to create a bootable USB key with a linux on it, with integrated virtualization.

It's a good idea to have a strategy in place in case of emergencies. If your hard drive tosses you errors, behaves badly or doesn't even appear, what to do? If programs crash at random, you need to be ready. You can prepare for this by creating a bootable flash drive containing some diagnostic and repair utilities.