Chromium OS, the open source build of Google's upcoming web-focused netbook system, was made into a thumb-drive-friendly build early on by a helpful hacker named Hexxeh. His latest build, ChromiumOS Zero, adds Chrome extension support, speed boosts, and other goodies.
Here's the official list of updates at Hexxeh's blog, with notable improvements in the delay suffered by Broadcom-based Wi-Fi and the Chromium browser at the heart of the OS. The build still fits on a 1GB USB drive, surprisingly, can be updated in-system from this release forward, and is offered as a BitTorrent download from Hexxeh's site.
Wanna give ChromiumOS Zero a go on your own laptop from the safety of a USB stick? Check out Gina's human's guide to running Google Chrome OS, which details running a Hexxeh-based build from a thumb drive.
ChromiumOS Zero is a free download, and boots (usually) on non-Mac systems.