Debian net install installs a very basic system, then allows you to install more stuff.
I tried 3 different sets of pendrivelinux instructions, and none of them successfully booted.
(I'm on an intel mac mini)
So I used a normal install CD of geubuntu, it recognized my thumb drive, and I partitioned with a swap partition, and it boots just fine and runs great!
I did have to run down to the store and buy a new thumbdrive (8 Gb, only $40) though because it didn't fit on my 1 Gb drive. I think it would install successfully on a 2 Gb drive, just boot up and follow the normal installation procedure, choosing your thumbdrive when you get to the disk partitioning part.
It really irked me that the installer didn't allow any package selection.
That's why I suggested the original: Debian!
A good linux distro installer should allow some way of selecting what you want or don't, and total up the hard drive space before starting, but maybe I'm just old fashioned. I would think most of them should fit on 2 Gb if you just don't install everything.