I have installed Xubuntu on a penstick and have read many tweaks about performance and wanted to ask this forum for its opinion on how much should be added to RAM via /dev/shm and or tmpfs?

I don't think adding more RAM space for /dev/shm is going to translate into a performance boost (unless you're running large memory consuming applications). The speed is more or less going to be determined how fast the data can be read from the USB stick, which is more of a hardware issue.

I think that would depend on what you intend to do. Back when I was using gentoo - a loooong time ago - there was really a point to using tmpfs because it meant that temporary files created during compilation were not written to disk but to RAM so if it was a large piece of software - which translated to many such files - the gains could be considerable. In all other cases, I don't expect you will really benefit. Maybe having temporary files written to RAM will increase the life span of your thumb drive but the performance boost would be minimal.

that is exactly what I intend to due. The application that will be used I will use tmpfs to store its temporary files such as the caching and temporary files that can be pulled out of memory as opposed to using the pen-stick. From what I understand there will be less read/writes to the stick and using the faster memory as opposed to the pen-stick.