I will get a phone with a 4GB harddrive soon and want Linux to boot off it when connected to a PC through USB. Which is the best USB-drive based linux distro(Best in terms of bootspeed, easy configuration, wide hardware recognition etc.)

Any help is greatly appreciated.

Check out Damn Small Linux. The last time I visited their site I believe they had just introduced a USB pendrive version which is what you're looking for I think.

Yes, I did, I also was seeing live cd OSs like Bonzai and Knoppix, but I need something w/ kde(would it be too big)? I dont mind giving 512MB for core stuff, 128 for swap(is swap needed? what do cd OSs like Knoppix do?), 384 (or lesser) for my use. I preferrably would like something based on a Desktop Distro so that I can easily update my packages. I want the OS to be an extension of my desktop, if I have no access to my comp, I just want to go to some comp, plug in my phone, and have access to all my files, my firefox bookmarks and stuff like that. I would prefer oowriter(but the entire office package comes w/o a choice),gimp, k3b, amarok,konsole,kaffeine(or mplayer),amsn,apollon.

Puppy Linux
http://www.goosee.com/puppy/

"Feather Linux is a Linux distribution which runs completely off a CD or a USB pendrive and takes up under 115Mb of space. It is a Knoppix remaster (based on Debian), and tries to include software which most people would use every day on their desktop."
http://featherlinux.berlios.de/