I tried several alternatives:
1) Standard Live USB installation (FAT32 formatted ) with max 4GB persistent store
2) Live USB with two partition: first FAT32 for syslinux boot, second NTFS (or what you like) with 7GB persistent store
3) HDD installation with 1GB swap and 59GB RaiserFS filesystem (using 0wn standard installation)

at the end my comments are:
1) best choice from every point of view. Knoppix is a good live distro as it is
2) non-optimal: is slightly slower in boot or loading applications...
but if you need extra persistent store to update or installing more preferred applications without remastering is an acceptable compromise
3) I strongly advise against: if a crash happens, or is a power failure, or an incorrect update package, the file system will be damaged, or there will be a kernel panic, or grub2 will not boot, and so on up to having to reinstall everything from scratch
(the third time that I've such a problem I gave up trying to fix it)

I will wait a new release of knoppix to have new experiences....he he he he