Not all USB flash drives are supported for ready boost. However In order for USB drive to be recognized, you can use the following registry hack.
1. Let Vista test it, and check the Do not Retest this device checkbox.
2. Unplug the device
3. Go to regedit
HKLM\SOFTWARE\Microsoft\Windows NT\CurrentVersion\EMDMgmt
4. Find the key related to you device (the device vendor and name is in the key)
5. Change the following values:
Device Status 0×02
ReadSpeedKBs 0×1000
WriteSpeedKBs 0×1000
6. Plug the device, right click on it to open properties and enable cache.
Ready Boost Time.