On the update that dropped this morning

Don't use it for installing a game to a USB device (I am for the hell of it to see performance, but it's VERY slow)

good for backing up game saves and profiles though to take to a friends
Any USB stick will work as long as there is enough space, >512mb needed IIRC (256mb for the install and 256mb minimum size) so I made a 12gb partition on my USB stick for it to see what it was like