I'm considering running my laptop from a USB flash drive. The system would be one of the Ubuntu family.
What should I do to ensure that the USB flash drive lasts as long as possible?
What can I do to improve system performance?
Everything you can do to reduce the amount of disk access will help if you are running from a flash drive (in both performance and flash drive life).
However, while you can run an OS from a flash drive, I would advise against it. They really aren't designed for this. You'll significantly impair both the life of your flash drive, and the performance of your PC.
Easy Peasy is a customized Ubuntu for netbooks. You can basically turn your USB drive into a LiveCD.
I agree with Macha's suggestion not to put swap on the USB drive.