Well, if I understand the questions correctly:
1. It doesn't matter what type of USB storage device you use, they will all work. You can use a suitably large USB flash drive, a USB HDD, etc, etc.
2. Are you asking about how long the average lifetime of a USB flash device would be while running BT from it? Modern flash devices have vastly improved wear-leveling systems, so there is very little to worry about in terms of going over the per-cell R/W values (I've been running my personal server off of a CF card for quite some time now). As for speed, faster is always better. A faster storage device is going to give you better system performance, so get the fastest you can in your price range.