The tale of Linux as live CD or USB started all with Knoppix. First time Knoppix showed that you can have an OS which you need not install and can carry conveniently to anywhere you go! Other Linux distros soon followed the suit and possibly, Knoppix lost it's advantage somewhere down the line.
From Knoppix 7.0.4
I have heard a lot of Knoppix but never used it before last week. On the