It has been reported that sometimes the installer freezes during virtual disk formatting (typically at 33% during System.Virtual.Disk formatting). A pause of 1-15 minutes may be normal, but longer than that is pathological. There are known issues that can cause similar symptoms: a missing HD/controller module will slow down disk I/O to the point that users might think it is jammed. Also, if the virtual disk image file is not properly pre-allocated with the host filesystem (ntfs) that might cause slowdowns. But the problem has been reported also by users with full DMA acceleration that waited several hours.
None of the devs has been able to reproduce the error so far, and even among users that experienced that, it seems that the issue occurs randmoly (repeating the installation sometimes succeeds). NTFS decompression/defragmentation help only occasionally. Reducing the virtual disk size to <= 4GB sometimes seems to help too. As of today we have no clear (and reproducible) understanding of the causes/solutions. See https://wiki.ubuntu.com/WubiGuide under "known issues".
17 retries and I gave up with this silly program, wubi, and refuse to try it again for anyone. I'll wait until I buy my MacBook Pro next month for an open source configuration.