bad news: I have no idea how deleting the drive partitions would affect a LiveCD's bootability?
it should boot whther theres a drive or no.
uhh, yes USB is much better than CD anyway
it'll boot faster and on most distro's
you can run persistent(i.e. save settings and changes)
like a installed system.
assuming your usb is fat32?
you can put many distros there depending on size of usb
how big is it?
a nice small distro with gparted, firefox and flash10 is browserlinux-353
as it says there, you can install to usb using Unetbootin
now, I can trick out that usb to boot many many toolkit distros(rescue,etc)
with a great graphical boot menu too
I made ThorsHammer to be able to boot from usb with no probs
all you gotta do is copy the iso contents to usb
set bootflag with gparted
and install syslinux to usb
Unetbootin can do almost all of this
try browserlinux with unetbootin and see if it boots
can your PC boot from usb?
if not, we can fix that too
EDIT:ThorsHammer has browserlinux remaster named "RescuePup"
as both are Puppy-4.12