Mine was resolved, I recommend removing the LAN/network cable when installing else it'll take even more time. Run all the updates etc.. after the installation is running and complete via apt or using the software-update.
Mount the UBUNTU image in WIN7, turn-off the antivirus, change the User-Account-Control settings to minimum just for the preparation of USB device. Delete the partition of the PenDrive completely, I used BOOTICE for that. Disconnect the internet connection even though UBUNTU advices against it. When installing via WUBI-installer select the Flash Drive you prepared. I reckon the WUBI installer even installs 12.04 on an NTFS or a FAT32 partition, this will result in 3rd grade speed and performance, hence I recommended you to delete the partition and leave it all to UBUNTU. If you get any more error, I recommend you to burn UBUNTU 12.04 on a decent CD since it's an LTS release it'll be more profitable.
If installing from the CD follow similar steps, i.e, select the entire PD for installation, and leave it completely to UBUNTU and disconnect the internet connection while installing. After the installation reconnect to internet, download ~ 450-490MB of updates/apps. Set all the customization you need and install the required drivers if the need arises.
Don't worry about UBUNTU creating a too large SWAP file partition, it can be adjusted pretty easily once your installation is complete.
My UBUNTU 12.04 is running from a Sandisk Cruzer Blade Z50 8GB, I selected the entire pen drive for formatting, it's running around 20-25% faster as compared to NTFS/FAT32 partition even after being the Primary HDD.
Remember if you encounter any more errors or problems use Google/Ubuntu forum-help-site they have enough material to get you going.