>We currently have some great sales on USB external hard drives here, which I will get as a backup, but I wondered if it could be used as a primary drive. Can you boot from a USB device just like I would a CD? Is this determined by the BIOS, so only newer PCs might have the option?

Newer PC's tend to be able to do it, but I have found some new ones that can't. You might see the option in your BIOS. I even have a PC that won't give USB as a boot option unless the USB device is connected. Also, you may want to consider building your own external USB drive, you could save a few bucks. I also have an external laptop USB drive which is handy becuase it is portable. You can find 40 gig ones on sale for about $100+.