Distribution recommendation for USB flash disks

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http://unix.stackexchange.com – I'm a linux system administrator and dealing with big iron distributions like debian and redhat for a long time. I need a recommendation for a small distribution which I can install to USB flash disk. I need a general purpose distribution with an up-to-date kernel (especially ext4 / GPT support is needed) to carry some filesystem operations. Desktop environment is optional. In-Place updates like a real installation is a huge plus (I just don't want to reinstall it with every major version). (HowTos)