OK so I have a Phat 360 and my friend has a Slim. Is there any way to take my profile to his house and vice versa without recovery of gamertag rubbish? On two Phats I could use my MU but what do I do with a Slim which has no MU slots?!?
As long as it's at least 1GB yes. You might get a message on the Xbox about it not meeting performance requirements but it'll still let you use it and since it's just for profiles you shouldn't have any problem. I keep my profiles on a USB stick myself.
2GB minimum.
Also, problem goes away when the new dash comes and brings cloud based profiles.
To use a USB flash drive with your Xbox 360 console, the USB flash drive must meet these requirements:
The USB flash drive must have a minimum of 1 gigabyte (1 GB) storage capacity.
2GB minimum.
Also, problem goes away when the new dash comes and brings cloud based profiles.

1GB sticks do work. I know because I am using one. Microsoft can also confirm:
http://support.xbox.com/en-US/xbox-360/how-to/usb-flash-drive
.