Thank you for reporting this to Ubuntu.
Could you please let us know if you were attempting to install the Desktop or
the Netbook edition of Ubuntu onto to the USB drive? The Netbook edition should
work on a 1GB drive, while the Desktop edition requires a 2GB drive
(https://help.ubuntu.com/community/Installation/FromUSBStick#Target%20machine).
Once you let us know which you were trying to use, we will know what actions to
take next.
Cheers
** Changed in: usb-creator (Ubuntu)
Status: New => Incomplete
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Doesn't really work on 1GB drive
https://bugs.launchpad.net/bugs/517729
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