I use 60gb for Windows Vista / 7
I keep my Steam folder on 2nd partition D: , currently that folder is 171Gb!
Also, you can probably upgrade your USB drive by simply swapping over the drives inside.
I also recommend that you get this as your C drive and use 1tb as D for Steam / Data..
http://www.overclockers.co.uk/showproduct.php?prodid=HD-047-OC