I struggle to run Ubuntu from flash. First I tried installing the whole
system to an ext3 partition on an 8GB USB flash drive - this is
incredibly slow because it is hard to tune commit writes to ext3. It is
possible to lower writes while mounting unnecessary paths as tmpfs
(created in RAM) and/or shutting down extensive indexing services.

Then there is this persistent USB option which runs fast like a dream,
but doesn't update well. I am experiencing this bug too.

APT says somthing like "cannot create symlink from
/boot/vmlinuz-2.6.27-7-generic to /vmlinuz". Maybe this points to some
problem with casper filesystem. Maybe it doesn't handle symlinks well.

-- 
package linux-image-2.6.27-7-generic 2.6.27-7.16 failed to install/upgrade: 
subprocess post-installation script returned error exit status 17. Note : This 
is on a persistent liveUSB !
https://bugs.launchpad.net/bugs/300075
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