A Live CD or LiveCD or CD Live Distro is a computer operating system that is executed upon boot, without installation to a hard disk drive. Typically, the LiveDistro is named after the bootable medium it is stored on, such as a CD-ROM or DVD (Live CD/DVD) or a USB flash drive (Live USB).
The term "live" comes from the fact that these "distros", or software distributions, each contain a complete, functioning and operational Operating System on the distribution medium. A LiveDistro does not change the Operating System or files already installed on the computer hard drive unless told to do so.
Benefits and Disadvantages.
The benefits and disadvantages are about the same on all the Live Distro media types, but there are some advantage and disadvantage variances pending on the media being used.
I myself prefer Live Usbs over CD because the data contained on the usb can be changed and additional data stored on the same device. This allows me to add additional information to my usb that would not be allowed on a CD. With my Usb I can actually save all my setting so next time I boot to it no matter the machine, my past setting and preferences are saved. This is a big benefit because there are more and more open source tools being developed every day, along with updates for existing ones. This allows me to capture those updates and install the newer software without the worry of having to do it all over again the next time I sit down at a machine. Also with the right size usb I can leave additional space on it for my own personal items that need to be used outside of the Live environment. This is one of the disadvantages to Live CDs.
Due to the size of alot of USBs they can be take anywhere you go, because they can be slipped into a shirt or pants pocket or even worn around the neck with a lanyard. Sadly CDs do not travel as conviently. The disadvantage to this wonderful portability is the loss factor. USBs become easier to loose and with them getting smaller and smaller, it makes them that much easier to loose than before. So as a precaution I would recommmend encryption when using USBs if you choose to carry any personal data on them.
With USBs being a solid state form of storage there are no moving parts involved which allows for faster performance when reading and writting data to them. We have stated that a LiveCD can not be modified by when it comes to reading the data from it, there is alot more invovled with it. The CD Rom drive, the spinning of the CD, where the USB is directly accessed so performance is much faster. Sadly there is a difference between USB 1 and USB 2 but with USB 3 on it's way out, the newer the computer the better the performance you will see with your LiveUsb.
Lastly not that it will happen over night, but alot of laptops are moving away from CD from drives and only have USB ports as the primary means of transfering and storing data. One of the most popular laptops without a CD Rom drive would have to be the MacBook Air and then the whole category of NetBooks.
Variety
There are many flavors of Operating Systems that can be installed on LiveCDs and LiveUSBs.
Pending on the purpose or who you ask you will get different opinions on which is the best. I myself could not say eith but I can say which ones are the most noted for their features and performance.
Knoppix - is an operating systemoperating system based on Debian designed to be run directly from a CD /DVD. Knoppix was developed by Linux consultant Klaus Knopper.
Slax - is a Linux Live CD operating system based on Slackware. It does not need to be installed on a computer system's hard drive; it boots and runs from either a CD or USB drive. There is also an option to run Slax from RAM. SLAX was developed by Tomáš Matějíček in Czech republic using the Linux Live scripts.
Ubuntu - is a computer operating system based on Debian GNU/Linux, a popular Linux distribution. Its name comes from the Zulu word "ubuntu", translated as "humanity to others", describing the ubuntu philosophy: "I am who I am because of those around me," a positive aspect of community. Ubuntu's goals include providing an up-to-date, stable operating system for the average user, with a strong focus on usability and ease of installation. Ubuntu has been rated as the most popular Linux distribution for the desktop, claiming approximately 30% of desktop Linux installations in 2007. Ubuntu is also used on some high profile servers, including those belonging to the Wikimedia Foundation.
References:
http://en.wikipedia.org/wiki/Live_CD
http://en.wikipedia.org/wiki/Live_USB
http://www.livecdlist.com/
http://en.wikipedia.org/wiki/Slax
http://en.wikipedia.org/wiki/Knoppix
http://en.wikipedia.org/wiki/Ubuntu_linux
http://en.wikipedia.org/wiki/Slax
http://en.wikipedia.org/wiki/Knoppix
http://en.wikipedia.org/wiki/Ubuntu_linux