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Ubuntu is a version of the Linux operating system. Other variations include Yellow Dog, Red Hat Fedora, Damn Small Linux, etc. Some versions of Linux like Red Hat you have to pay for because they provide tech support, whereas Ubuntu is pretty much you on your own to search/fix whatever problems occur. Well, not entirely as there are forums and crap, but it's not as easy as dialing a number. Mostly all developers make their older versions free when a new one is released though.
Ubuntu is a popular version because its graphical user interface resembles windows/macs, but to access all the features and be able to configure it quickly you will need to know some Linux command line. Usually you can just download the iso/installer off the site if don't want to wait for CD's.
I put Yellow Dog on my PS3 a few months back. Torrented the latest pay version and after a little tricky install it was up and running. Pretty much became a glorified web browser/multimedia player for my tv, which I could already stream to from my computer anyway. Could have turned it into a small web server, but I don't want to leave my PS3 running 24/7.
If you aren't hosting anything and want full functionality/compatibility with whatever programs you have now that's free, I suggest trying out Windows 7.
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Think like a man of action, act like a man of thought. -H. Bergson
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