TrueCrypt is a good option, and actually that will be the next tutorial I write, but I haven't written it yet. They have tutorials on their web site, though. As for the thumb drive size, TBB takes up about 100 MB, and GPG4USB takes up about 20 MB, so any thumb drive of 1 GB or more will be more than enough. If you run the Bitcoin-QT client you would need enough space for the block chain, so at least 8 GB at this point but preferably 32 GB to future proof it. You don't need to run the Bitcoin-QT client though, it's a pain in the ass.