Every computer has physical temporary storage memory called RAM which provides space for your computer to read and write data to be accessed by the CPU. More RAM usually allows your computer to work considerably faster so generally speaking, the more RAM you have, the better.
The Paging File practically allows the computer to use hard drive space as RAM. This means that if your computer has 1 GB of physical RAM and your computer needs to use 2 GB, it will firstly use the 1 GB of physical RAM and then anything else will be used from the hard drives Pagefile which is called virtual memory.
As a USB Flash drive is faster than a hard disk (in general; excluding SSDs), Windows 7 has a feature called ReadyBoost which can improve your system performance by using a faster USB Flash Drives instead of your hard disks when the computer runs out of RAM.
When you insert a device with this capability, the AutoPlay dialog will offer you the option to speed up your system using Windows ReadyBoost. If you select this option, you can then choose how much memory to use for this purpose.
The recommended amount of memory to use for ReadyBoost acceleration is one to three times the amount of random access memory RAM installed in your computer. For example, if your computer has 1 GB of RAM and you plug in a 4 GB USB Flash drive, setting aside from 1 GB to 3 GB of that drive will offer the best performance boost.
Note: Only Windows 7 and Vista has the ReadyBoost feature.