I've tried to do this in the past, and not got anywhere with it. As mentioned by Keith (kado897) above, this is most likely because the installer expects certain files to be on the root of the drive.
The only OS where this method has proved successful is Linux, where I have both 32-bit and 64-bit versions of Ubuntu (not tried other distros, but would expect it to be the same) on a single 2GB stick and I can boot to either of them.