I'm new to BackTrack as well, so forgive me if this turns out to be incorrect, but as far as I know if you are going to install BackTrack on a USB you will need at least 2.7Gb of free space, which 1Gb USB obviously does not provide.
With regards to the speed, I'm pretty sure BackTrack will always run faster from HDD than a USB. LiveCD is the worst, USB being faster and HDD being the fastest.
Hope this helps.



