A USB flash drive is a small external storage device that reads and writes to flash memory

A solid-state storage medium that's both inexpensive and durable 
It consists of a flash memory data storage device integrated with a USB (Universal Serial Bus) interface. USB flash drives are typically removable and rewritable, and physically much smaller than a floppy disk. Most weigh less than 30 g.

A USB drive -- also known as a flash drive or keychain drive -- is a plug-and-play portable storage device that uses flash memory and is lightweight enough to attach to a key chain. A USB drive can be used in place of a floppy disk, Zip drive disk, or CD. 

Flash memory is a type of EEPROM which stands for Electrically Erasable Programmable Read-Only Memory.  It¶s a non-volatile memory that can store little data chunks especially when there¶s no power.  In other words, usual EEPROM is only byte-erasable whereas Flash is block-erasable.
What We see on the left is the chip that holds the actual flash memory and the chip on the right is called a microcontroller. Inside left chip is an array of memory cells which themselves contain floating gate transistors.  With a regular transistor the data would be lost once the power is turned off because that shuts down the whole thing and it stays in the 0 position even when power is back on.  A flash memory cell however saves the data because it s basically in a permanent 1 position. That s due to its second gate, the floating gate, which enables electricity to stay trapped between it and the first gate.

First commercial Product: Trek Technology and IBM began selling the first USB Flash drives commercially in 2000.  IBM's USB flash drive became available on 15 December 2000 and had a storage capacity of 8 MB more Than five times the capacity of the (at the time) commonly used floppy disk.  In 2004, Trek Technology brought several lawsuits Against other USB flash drive manufacturers and distributors in an attempt to assert its patent rights to the USB flash drive.

1.USB Flash Drives Vs Floppy Discs USB flash drives are sturdier and offer more storage in a smaller form factor than floppy discs. Better yet, they require no drive for your computer. Just insert the USB flash drive into a computer's USB port using a modern operating system and you're ready to go to work. 2. USB Flash Drives Vs Optical Storage (CD-R, CD-RW, DVD- R, DVD-RW) Re-writeable optical media typically require additional application software to store data. Optical media are also sensitive to surface scratches which require a certain level of caution when handling. USB flash drives are more rugged and scratching the product can not impact your data. 3. USB Flash Drives Vs External Hard Drives These units are best suited for backup and storage of large amounts of data. External hard drives offer storage of several 100GB of data. However, they are larger in size as well as sensitive to shock due to Internal moving parts.

Examination of Current Issues
Apart from issues in various storage devices , there are however some drawbacks which are there in USB flash drive itself. These issues are posing serious threats to the success of USB flash drives.

1. Fake products Fake USB flash drives seem to be available in the market. These are typically low capacity USB drives which are modified so that they emulate larger capacity drives (e.g. a 2 GB drive being marketed as an 8 GB drive). Security threats Flash drives present a significant security challenge for large organizations. Their small size and ease of use allows unsupervised visitors or employees to store and smuggle out confidential data with little chance of detection.

1. Most USB flash drives do not include a write-protect mechanism, although some have a switch on the housing of the drive itself to keep the host computer from writing or modifying data on the drive. Write-protection makes a device suitable for repairing viruscontaminated host computers without risk of infecting the USB flash drive itself. 2. A drawback to the small size is that they are easily misplaced, left behind, or otherwise lost. This is a particular problem if the data they contain are sensitive .

3. To protect the USB plug from possible damage or contamination by the contents of a pocket or handbag, and to cover the sharp edge, it is usually fitted with a removable protective cap, or is retractable. 4.Like all flash memory devices, flash drives can sustain only a limited number of write and erase cycles before failure.

Some Measures for dealing with issues related to USB flash drives
Maintaining Productivity and Security Organizations must develop security policies appropriate for the type of device and the information it contains (i.e. public, confidential, restricted, controlled), and provide a program that will foster policy compliance without needlessly constraining personal productivity. Weighing Risks and Benefits of Using USB Ports Companies must control USB ports to ensure that only authorized drives are used with corporate computers. Encrypting Data Before implementing a security solution to manage ports and control devices, IT managers should also sketch out how encryption fits into their plans, including how encryption should be implemented, who must encrypt data, from where can users access encrypted data.

Centralized Management: A Crucial Element The majority of companies have not taken steps to control USB ports, manage and track the use of mobile devices, or protect and encrypt the data on these devices. Many organizations are not even aware of the number of devices connecting to their networks, or from where. Policies Need Real Enforcement Policies are great, but they must be enforced. Ultimately, it comes down to controlling risks. Mobile managers need to tell users why a policy is being implemented, what it means and how it will be enforced. Policies should be socialized within an organization before and after the policies are implemented. Constant Upkeep Security should not create new challenges to an already over-burdened enterprise. Thus, policies should be reviewed quarterly and updated to address changing threats and risk profiles. Clear deployment and usage policies, coupled with user training on security and an annual review of the company's mobile security policies, can help companies make intelligent investment decisions and limit risks.

Impact on Employees, Industry or Government
‡ If you share a computer, USB flash drives are a great way to store personal information ± use them instead of the computer's hard drive. ‡ According to some manufacturer's specifications, USB flash drives can maintain data for 10 years ± in that same period you¶ll probably have to replace your computer¶s hard drive three times. USB flash drives compare favorably to other methods of storing or transferring data because they alone are not only pluggable, portable, and powerful, but durable and reasonably priced.

A Gadget Show by UK¶s Channel Five cooked one of these flash drives with propane, froze it with dry ice, submerged it in various acidic liquids, ran over it with a jeep and fired it against a wall with a mortar. A company specializing in recovering lost data from computer drives managed to recover all the data on the drive. All data on the other removable storage devices tested, using optical or magnetic technologies, were destroyed.

Personal data transport
The most common use of flash drives is to transport and store personal files such as documents, pictures and videos. Individuals also store medical alert information on Medic Tag flash drives for use in emergencies and for disaster preparation.

Secure storage of data, application and software files
With wide deployment(s) of flash drives being used in various environments (secured or otherwise), the issue of data and information security remains of the utmost importance.

System administration Flash drives are particularly popular among system and network administrators, who load them with configuration information and software used for system maintenance, troubleshooting, and recovery.

Computer forensics and law enforcement A recent development for the use of a USB Flash Drive as an application carrier is to carry the Computer Online Forensic Evidence Extractor (COFEE) application developed by Microsoft. COFEE is a set of applications designed to search for and extract digital evidence on computers confiscated from suspects. Brand and product promotion The availability of inexpensive flash drives has enabled them to be used for promotional and marketing purposes, particularly within technical and computer-industry circles (e.g. technology trade shows). They may be given away for free, sold at less than wholesale price, or included as a bonus with another purchased product.