U3 is basically just a special way of packaging a program up so that it stores all of its prefs on the USB drive, and responds to shutdown events (ie disk removal) properly.

I've got a Memorex 1GB U3, and I've got some U3 apps and some stuff from PortableApps. U3 also automatically adds its own programs to its launcher menu, which is really just a convenience thing.

The most useful thing I've found was that my Memorex drive came with Migo, a rather nice little sync program, so I can basically keep my "My Documents" folder and a subset of the network shares I use at the office all synced up.

What I'm curious about is if I can migrate a U3 app from one drive to another. I'd like to go to a 2GB Sandisk, but want to take Migo with me.