I have a 2Gb memory stick that I use at work. It's handy for quick backups of some of our databases or if I want to move them around without hitting the network. I also use it to archive some old files that no one is ever likely to want again but we daren't delete.
I've heard about people putting small versions of Linux on them so you can boot from it and use it to fix a broken machine.
The best use I've seen yet is portable applications, they come in Windows, Linux and Apple flavours. A lot of them are linked to from here. There are all sorts of things here, from office apps to PDF readers. This means you can just plug it into your computer and go.
If you combine this with web applications such as these you have pretty much everything you need. All of a sudden your expensive computer becomes an anorexic client.
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