Power users of Ubunto knows howto create a Bootable Ubuntu USB PenDrive. But Newbies have some confusions. From Ubuntu 8.10 onwords Ubuntu included a tool for making usb bootable. It is very simple.
USB Startup Disk creator tool
1. A USB Pendrive with Minimum 700 MB
2. An Ubuntu CD or Ubuntu CD iso file.
Howto make Bootable USB
Start USB Startup Disk creator tool from System->Administration->Create a USB startup disk.
Either insert your Ubuntu CD, or click Other and browse to your ISO file. Plug in your USB drive. (You can plug USB and Put CD before running program). The software should recognize the pendrive immediately and check that there is enough free space.
Finally, you can choose whether you want your USB system to be persistent between boots( this option is good because your PenDrive will keep Your Documents and Settings in a reserved extra Space ) , or static like a live CD. By Adjusting the slider you can choose how much space Ubuntu will have on the disk to reserve, or select the Discarded on shutdown option for work like a live CD.
Now click on Make Startup Disk. and wait while the USB boot disk is created.
Now Your USB Pendrive is bootable.