CDs and DVDs are finding their places at garbage boxes these days. To run portable OSes from CD is an age old process. Here is a very cool alternative though. I guess some of you are well aware of USB DSL or damn small Linux.
Read it here
It was created by John Andrews, and is basically a trimmed down version of an early Knoppix build, making it perfect for smaller drives. Based on the 2.4 kernel, DSL is great to use for older and slower computers as well. It will fit and run on portable devices or drives as small as 64MB.