Symantec BackupExec 12.5 save to USB

Have a look @ this article by one of the TAs - https://www-secure.symantec.com/connect/articles/how-span-disk

You would need to look at B2D system. You can setup B2D even on a USB connected storage. However, it is recomended that you should dedicate this USB disk for backup exec.

I am not sure if you are wanting to use the USB disk that you have as a removable disk or a fixed disk.But both type of disks are possible.

"The only thing I'm concerned is, what if the USB drive is already  full will the system ask for another drive?"

No it will not , it will give you an alert saying B2D is full either free up some space or cancel the job.

http://www.symantec.com/docs/TECH23201

How will it go if we will use external USB drive instead of tapes?

Using Extenal USB disk as a backup to disk folder is not supported in BE versions prior to .BE 2010 R2

You can use B2D for NAS/Fixed disks

You can use removable B2D for enclosed USB storage devices like dell RD1000 or RDX

Please review this article about using External USB`s with BE 2010 R2 and R3

http://www.symantec.com/docs/HOWTO55855