My USB's 16 GB, but I only get to use 4 GB in persistence file. Any way to increase it?
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Take a look at http://www.pendrivelinux.com/create-a-larger-than-4gb-casper-partition/. The tutorial is for an older version of Ubuntu but works fine for 10.10 and 11.04.
The reason why a separate partition must be created is because the USB creator only makes one partition by default (FAT32 filesystem). Onto that partition it copies the CD or ISO contents and creates a persistence file (ext2 formated) called casper-rw. Since FAT32 can't hold larger then 4GB files the persistence file can't be any larger then 4GB.

kicsyromy
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Can't we increase the first partition instead of making a new one? – Oxwivi May 14 '11 at 17:23
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The USB creator only makes one partition by default (FAT32 filesystem). Onto that partition on copies the CD or ISO contents and creates a persistence file (ext2 formated) called casper-rw. Since FAT32 can't hold larger then 4GB files the persistence file can't be any larger the 4GB. So that's why a separate partition must be created. – kicsyromy May 22 '11 at 07:54
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Edit the answer and add in the bit about why I can't increase the size of the persistence file. – Oxwivi May 23 '11 at 13:47
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Can it be any other FS than ext2? – Oxwivi Jun 10 '11 at 19:56