Are we talking about a live system? Or are we talking about a system which has been normally installed on a disk device (no matter whether a Sata harddisk or an internal SD card or an internal SSD)?
A live system will live on a DVD or a USB stick happily. Most live systems will require about 1 GB or sometimes 1.6 GB like my Ubuntu 12.04.2 live system. The reason that the live system does not require more disk space is that the whole system has been archived and compressed inside a squashfs filesystem. This squashfs filesystem holds much more than 1 GB or 1.6 GB of files and folders. The needed files get extracted to RAM at runtime.
Yet, if we are talking about a system which has been installed to a disk device then such a system will easily exceed 5 GB because the content of the squashfs gets extracted onto the disk permanently. Moreover most installed systems will start pulling extra packages, language support and updates, onto the disk device as well.
Putting a live system onto any device (DVD, USB pendrive, SD card) is not normally referred to as an installation.
Old bugs good, new bugs bad! Updates are evil: might fix old bugs and introduce no new ones.