I went ahead and updated QGIS on my USB flash drive to 0.8 without any hassle. Of course you wouldn’t want to run your production QGIS off of any flash drive, but I can tell you that having a GIS system in your pocket comes in handy. If I could only get FWTools to run better I would add that to my flash drive too (I have 1.0.0a7 running, but its too much of a hassle right now to really work with it so I probably won’t update it to 1.05 anytime soon).

QGIS running on my USB flash drive