I have to make my Linux system to start from 8 or 16 GB USB stick.

I think I can do that by copying the iso - file not by 'burning' it on a writeable DVD but copy it to a Linux formatted (?) USBstick. Is that correct?

If done my Gigabyte BIOS lets me choose between

USB-FDD
USB-ZIP
USB-CDROM
USB-HDD

and I do not understand the differences. Previous BIOS's used 'USB', and no more. USB-HDD seems the most logical to me. But if is correct, how do I tell my systems the partition my HOME is in?

2014-01-23 jknwhz.

I can't answer that question, but you could use unetbootin. It has worked fine for me on a 16 GB thumb drive.

You could just use an installation cd and install to the USB drive in same same way you would have installed to a hard disk. Make sure to let the installation write grub to the MBR of the usb drive. Select the USB drive as the primary boot device in the bios.
Alternatively if you just want the equivalent of a Live CD, then use the unetbootin method mentioned above.

Regards,
Stefan

You could also use the dd command to put a Linux distribution on your flash drive.
As indicated above, you could use unetbootin or pendrivelinux and probably other similar software.
You mention Lubuntu. Ubuntu has software called usb-creator and you should be able to use that to create a bootable flash drive with persistence and also create an additional partition on which to save data.

Simplest would probably be to do an install as suggested by propofol.

If Fedora will work for you, they have documentation on how to build a live usb with overlay storage to use the entire capacity of your usb pen drive. I built a fedora 18 usb system that works fine on an 16gb pen drive.

Read the documentation on your distro's website, because they use different methods. Most require you to make the usb stick bootable with the program unetbootin. Some, like Fedora, have what they call a hybrid iso that you can copy to the usb stick with the dd command and that will be bootable. Salix lets you copy the contents of the iso to the usb stick and they include a program that can be run to make it bootable. Using unetbootin with a distro that uses a different method generally will not work.