I googled a bit for booting from a live-cd so there is no writeable media connected, and it looks like that's something this can't do. If you don't want it potentially storing data, you could try unmounting all the drives except for a ram disk you've made. It is hard to guarantee that the OS doesn't swap some data to a page file on the SD even if the wallet processing is only done in RAM.
For paper wallet creation:
https://bitcointalk.org/index.php?topic=361092.0Maybe it would be better to make a OS SD card just for paper wallets, and actually use the SD card as a backup of your paper wallets; just never let it touch the internet again and keep it secure. Or set it on fire.
Never connected to the Internet? I will bet every bit of software on it was on the Internet before it got there.
Are you planning on using Bitcoin Armory? I saw them at the Inside Bitcoin conference in Vegas an their software is made for just this. You can even make an encrypted paper backup of the wallet.
Backing up your wallet is not the same thing as making a cold-storage address.