This version of the Google operating system will be run off a USB drive, so naturally you will need a USB storage device of some type. The image file size is 2,988,442,112 bytes, so we recommend at least a 4GB drive and preferably 8GB of storage space. The files on the USB drive that you have should be backed up if you need them as they will be deleted during this process.
Read it more here at http://www.chromesos.com/category/guides.
