There are a few guides out there detailing how to do this.
There is a bit of work to do to get Windows at least on a USB drive. Vista, by Microsoft's hard coding, will NOT boot from a USB drive or install on one. The only way to do it, is to trick vista into thinking it is not being installed on a USB drive and the only way I know how to do this is to install vista through a VMWare. Through a VMWare, a USB thumb drive shows up as a generic physical drive with no USB root drivers supporting it.
After installing Vista, there are some registry hacks you have to do in the VMware console to prevent Vista from trying to detect what device it is booting from.
When you get all that done, you can use a USB thumbdrive to run vista, but the problem is, if you EVER get an update, or attach another USB device to force a USB check, Vista will find out what it's installed on and screw things up again. Just remember, that if you do that, don't shut down the computer before going back into the registry and re hacking it so Vista doesn't recognize the device it is installed on.
The only reason to do this, is SSD are still fairly expensive. 32GB for about $150 for the "cheapest" one and 32GB isn't all that much. Personally, when the 100+GB drives finally get into the $150 or less range, I'll then pick one up. I would do the thumbdrive route, but the hassle isn't worth it.