When I boot the NSLU2 with a USB flash drive (with the stock Linksys firmware), I cannot do XXX.
If you attach a regular USB hard disk to the NSLU2, you must first format the drive. This creates 3 partitions (two ext3 filesystems and swap). With flash drives, the NSLU2 won't normally let you do this. However, the NSLU2 still recognizes the drive and mounts it as a single VFAT (Windows-based) filesystem. This causes a number of problems and most of the fancy functionality of the NSLU2 is not available (like adding users, controling shares, creating backup jobs, etc). However, the box will still function as a simple Samba server with one directory shared. If this works for you, great. Otherwise, you may want to look into one of the custom firmware options to get more out of your box.