It's fairly easy to do, and quite common. There are a number of advantages to doing this.
Note, it is very important that your USB disk has its own PSU - the Pi can't supply enough to run without blowing its fuse.
There are a couple of ways to do it on the thread here:
http://www.raspberrypi.org/phpBB3/viewt ... =63&t=6565 along with some links to other threads with more details.
It basically boils down to:
1) Create a suitable partition on your USB HD (ext4 is good)
2) Copy the contents of the "/" partition onto the disk.
3) Edit /boot/cmdline.txt to say root=/dev/sda1 (assuming you only created on partition).
4. Reboot
You will still need your SD card with the /boot partition on.