I've written up a document on how to have whole-disk encryption (minus /boot) while having your LUKS key on a USB stick. (Whether or not this is a good idea depends on your usage model, and I won't get into that).

The document is at http://www.gno.org/~gdr/sysadmin/centos/5.4/usb-crypto-key.html and is targetted at CentOS 5.4. It supersedes my howto for crypto root (for interactive boot or USB sticks) for CentOS 5.1 - 5.3 (the old links are on that page).

If anyone has feedback on it, feel free to contact me privately.

Devin