Now you have option to try out all the linux flavor and choose the one you like most. I am sure all the linux flavours has something or other good, but I simple fan of Ubuntu. It gives all the flexiblity you can ask for.
Coming back to Live Linux. All you need a USB stick, installer for you Linux and Lili creator.
Once installed you have max of 4 GB of space to make any updates to your OS. Looking from todays prospective 4 GB is less but that is a constain that I know right, may be I am outdated on this. Still you can have most of the stuff you need.
Now if you go some place and wish to show something to someone no need to carry your machine and because you know all the drivers / software are there, you are kind of sure that it would work.
It is a gift for people like me who kind of play around a lot with Linux and end up spoiling them. No worries just do the reinstall / simple restore the files from backup of USB stick and you are good to go again