Have the original 360 running skyrim off a 8g flash drive. Haven't had many major issues till now, some texture bugs and screen tearing. ( plus the odd creature flying outer space )
Tested other games ; red dead redemption, GTA4, and Oblivion. Using the same formula as above and no problem.
work arounds tried
clearing catch
useing different save points
deleting save files
playing off disk
Heres hoping these issues will be addressed and do this game justice, for now it is unplayable. It was a true privilege to get 70 hours into this behemoth of a game.
Regards Rowdy.

and haven't had any issue with other games useing USB flash drive's.