Great info and references Joseph.  But it looks to me like neither one does quite what he asked about.  That could be my misread of the reference material (see below)

On 11/14/06, Joseph Sinclair <plug-discussion@stcaz.net> wrote:
Actually, the install of DSL designed just for Flash drives currently allows you to store your settings (home dir) in a file on the same drive
( http://www.damnsmalllinux.org/wiki/index.php/FAQ#How_do_I_save_my_settings.3F)

This one looks to me like DSL can save whatever you want but only by virtue of altering a backup configuration to save what you want saved and perhaps (it may be automagic) having to then do a restore after a reboot.

Puppy Linux also is designed to work correctly entirely off the flash drive, including /home (/root actually, since it defaults to running as root).  It uses UnionFS to unify the flash partition(s) (Puppy stores them in files for speed of boot, since it copies the whole system into RAM) along with a user partition stored in a special file on the same drive (all changes end up here).  It's done that way to enable efficient copy-on-change for the whole system, still permit auto-detect to work, and work with a unified image for both flash and CD (the CD has the same support for a writable file for the user's changes).
(http://puppylinux.org/wikka/FlashDetail)

And this makes me think Puppy only saves new and changed contents of roots home directory (/root).  Seems like this could include things like presentations and so on, but maybe not printer setups like he was looking for. 

In both cases, you get a functioning system that does exactly what was originally asked, that is that it runs well from USB flash (both systems have no swap partition, but will use one if available otherwise), and retains settings between sessions, like any normal install.

Does seem very handy if one understands the limitations and perhaps gaining that understanding is the real issue.  These references help a lot though.  It does seem like one should be able to purposefully create data files directly on the Flash device so the  issues would hopefully be mostly the kind of changes one might want to make to other parts of the file system (such as devices like printers).  This is another of those projects I would like to play with but never seem to get to.

It's not terribly obvious on the sites for both systems, but it does work this way.  The way both systems store the data (in a file) is done for three reasons:
1) Both systems are designed to be EXTREMELY frugal about writes to flash, and the settings file is only updated on shutdown (it's all in memory the rest of the time).
2) Using a file like this works better with UnionFS and with loading the whole system into RAM (which really speeds up the system).
3) The file can often be stored on someone else's filesystem (Windows NTFS/FAT16/FAT32, Linux Ext3, etc...), enabling you to share a friend/roommate's computer without disturbing their OS, regardless of their choice of OS.

==Joseph++