OMG! You have extra RAM that you can utilize which has nano-second access time, and you're asking to set up a USB
flash drive which has write speeds cripplingly slower even than your HDD?
Microsoft brought out the whole thing of TurboCache when they started selling Vista to the public. Ridiculous idea, which is why it's not on everyone's lips right now. The reality is Microsoft software contains inordinate amounts of DRM and spyware. These logging and scanning applications use the HDD to cache thousands of files just when you turn on your computer and load Steam and Firefox etc.
I got around this incredible inefficiency on my 32bit systems by
creating a RAMdisk to utilize the RAM windows can't access. So for an 8GB system, 3GB goes to windows and that leaves me with 5GB virtual drive, set up on RAM to play about with.
Google: planetamd64 use more than 3gb ram in xp
(or go here to check out some info)
http://www.planetamd64.com/index.php?showtopic=38005
You MUST put the IE temp internet files on it. (speeds up your system)
you should put Firefox cache on RAM also.
Definitely the JAVA temp files, speeds up Java applications online. (Chat, etc)
And omg YES definitely the swapfile. For some reason, no matter how much RAM you have, windows still uses the HDD to store and hold data. For no apparent reason except I guess that your HDD data is stored like a fingerprint. (I presume part and parcel of the whole DRM thang) I've been running Windows with swapfile on-RAM and my God it just doesn't lag this way

4GB is enough to set up a 1GB RAMdrive and a 256 or 512 Swapfile.
There's just so much unimportant junk you can you can set your system to move to the RAM. And it gets wiped when you turn your computer off.
I recently had to set the system to use the HDD as I modified the RAMdisk settings. Jesus Christ, I had forgotten what lagging was all about. So used to instant application loads, and pretty much zero delays on opening files etc.
Note:
On XP 32bit some legacy applications tend to lag on quad cores, like Media Player Classic. But there is an excellent piece of freeware which can be set to run on startup and automatically allocate 1, 2, 3 or 4 cores in whichever order to any application, and it can save Profiles settings.
http://www.koma-code.de
Software -> CPU-Control