well first of all Id STRONGLY advise to follow this howto:
http://www.nslu2-linux.org/wiki/Unslung/Ext3flash
I folled these instructions to create a swap-file on the fly:
http://www.netadmintools.com/art1.html
note that creating an empty swapfile took ages for me.
Firstly the slug isnt exactly fast, secondly the NTFS driver is just crawling.
Best if the slug is otherwise idle during that.