Generally depends what you are doing.
If you are planning on learning first, on a legal enviorment, I would recommend to install backtrack (dual boot, usb or virtually).
No need to do a large update over & over.
Allows you to add your own tools, and save files.
Allows you to save preferences.
At this point it seems that installed backtrack is the best option, but live backtrack gives you something that the installed backtrack dosn't.
It will always be in a clean state.
Just the fact that it is in a clean state, might be more important than all of the other points for a pen-tester, esepcially for a black hat. That is why another option is customizing the the live version.
It all boils down to what exactly are you looking for (as well what you prefer)? Learning -> Installed, Work -> Installed/Modified Live, Black-Hat Pen-Test -> Live/Modified Live.
Backtrack is built on ubuntu, updates are done the same way.
sudo apt-get update & upgrade
If you install it or use live cd you will have to update it, but
take in account that with the live cd you will need to do a large
update that may take from 15-25min, instead of small updates from
the installed OS.
- Running backtrack from harddrive/ssd is faster, than accessing the
OS from a externall usb/cd. In my case performance difference has
- If you build your own tools, or have found some tools that are not
included with Backtrack 5 can be added to the installed OS, if you
use the live version you will have to reinstall them.
When you boot into backtrack, your user is root and the password is
toor. You also have to start network by running
$ /etc/init.d/networking start
Some want their own password, wallpaper, have no need for stealthy
boot, and so on. So they modify it on their installed OS.