I can’t believe I haven’t mentioned the Core Linux distribution yet. It has been described as a Linux From Scratch version prebuilt with just enough to compile your favorite sources. Core Linux is not a distribution for the new Linux user; it is a distribution that is handcrafted by the user to do what the user wants. There is no packaging system; everything is done by compiling the sources onto the machine.
There was an article on the Core Linux forums recently which detailed one person’s experiences in installing Core Linux onto a USB stick in preparation for installation onto a EeePC. No word on how the installation went, but apparently booting from USB was perfect.
Using a distribution like Core Linux will give you an excellent education on how things work in Linux, and how to do things from the ground up. Using Linux From Scratch takes that one step further: starting with a Linux system, you compile everything – everything – and build your own Linux system starting from nothing.
Linux From Scratch takes a long time however, and can be quite challenging to get set up properly; Core Linux may be a better choice to start with. Both are excellent.