1.Will all games that run on linux,run on any version like ubuntu,kubuntu,fedora?
Mostly, yes. There might be exceptions, but not many.
2.Can WINE run all games and applications of windows?Will performance take any damage while running these apps?
WINE cannot run all games and applications. Check
WineHQ - Wine Application Database for app compatibility. You want platinum/gold support if you want minimal hassle running. There are work-arounds also mentioned on that page if some app needs them.
Typically, graphics intensive games/applications run slower in wine than in windows. But there are exceptions - some games give (marginally) more FPS on wine than windows.
3.Should i download the dvd version or cd version of ubuntu?
If you have reasonably good internet connection, CD version should be fine. Whenever you need to install something, just a quick install from Synaptic Package Manager should be good enough.
If your internet is slow, download DVD version so that you would have most of the applications installed and there is less chance of your needing to install lots of applications after installation.
4.Are there other distros which have =/better look than ubuntu?
Looks don't matter, you can change them very easily within a distro. Many themes are provided along with the distro, and many many more can be downloaded. What you want is good application availability, good support, popular enough so that game developers give direct installable for that distro. Ubuntu being the most popular, it is best to start with it. If you give more of your usage pattern details, I could suggest a better distro. But you look like a windows convert, so Ubuntu should be good.
Linux Mint is based on Ubuntu, and comes with Flash / MP3 / video codec support out-of-the box. Though they are not very difficult to install and keep updated with Ubuntu too.
5.Can i setup dualboot of win7 and ubuntu?
Yes. Install win7 first, leave some space for Ubuntu (around 10 GB should be enough). Then install Ubuntu. Ubuntu will offer to create a dual-boot system for you. Accept the offer and you are done.
6.Is there a 64bit version of ubuntu?is it better than 32bit one?Are there any compatibility issues?
There is a 64 bit version. Real-world performance advantage of 64bit over 32 bit is less than 10%. If you use only open-source applications (mostly from within Ubuntu's repository) you won't find any compatibility problems. But you talk of running windows applications, and in windows world 64 bit is not that widespread. So you might face compatibility problems with 64 bit, better go with 32 bit.
7.How is the performance of movie playback in linux?will it be better than windows?
Performance? Good performance should make the movie go twice as fast
? I am not sure how it matters. Mostly, movie runs without stuttering and without too-much CPU load on linux. Not sure how more "performance" than this is noticeable to the casual user.