[ILUG-BOM] challenge: customise ubuntu basic system to run from USB disk

[krishnakant Mane]

hello all.
I am putting this challenge with reference to my portable book reader project.
I want a way to customise my basic ubuntu system and run it from a USB
flash card that is put in mobiles or in cameras.
or may be a pen drive?
the system will be as follows.
1> a kernel having only those modules required to boot from a USB disk
and having sound, display, and other necessary things.  the kernel
wont have network drivers or even ide drivers.  no cd rom drivers.
2. I want to make such an OS  on the computer and then port it to usb.
3. I know I wont be able to boot this small system from my hard disk
after saying that I will exclude ide drivers.
I want a way in which I can create a chroot jail in my existing ubuntu
box and try things around a bit.
then some how may be format the USB disk with ext2 and then put it on
there.  or may be make an iso image like what slax does and put it on
the pen drive with the help of unionfs.
any ideas?
Krishnakant.