My biggest reason for using a USB flash drive is to carry a strongly encrypted file with all of the passwords that I'm likely to need and prone to forget. I have used KisKis (http://kiskis.sourceforge.net/) and have tried to use KeePass (http://keepass.sourceforge.net/).
I'm not sure either of these are the best of solutions, but I would be a huge advocate of portable apps if I could get a good portable password manager.
Big advocate. I'd tell all my friends, both of them. I'd get a t-shirt or something.