from: http://www.microsoft.com/windows/windows-vista/features/readyboost.aspx
Adding system memory or RAM is often the most excellent way to improve a PC's routine, since more memory means more applications are set to run without accessing the hard drive. However, improving the memory can be hard and expensive, and some machines have restricted memory expansion capabilities, making it unattainable to add RAM.
Windows Vista introduces Windows ReadyBoost, a new model in adding memory to a system. You can use non-volatile flash memory, such as that on a universal serial bus (USB) flash drive, to perk up performance without having to add additional memory "under the hood."
The flash memory device serves as an additional memory cache—that is, memory that the computer can access much more quickly than it can access data on the hard drive. Windows ReadyBoost relies on the intelligent memory management of Windows SuperFetch and can significantly improve system responsiveness.
It's easy to use Windows ReadyBoost. When a removable memory device such as a USB flash drive or a secure digital (SD) memory card is first inserted into a port, Windows Vista checks to see if its performance is fast enough to work with Windows ReadyBoost. If so, you are asked if you want to use this device to speed up system performance. You can choose to allocate part of a USB drive's memory to speed up performance and use the remainder to store files.