What Wubi does, is to create a harddisk image file. Perhaps you've heard of "iso images" or "cd images"? It's the same thing, except it simulates a harddisk instead. To Windows, this is simply a large file. To Ubuntu, it's the harddisk.
In order to use a Wubi installation, you don't need to format your disk or anything like that. It's just a folder in your Windows filesystem. Whether or not it will actually work with Windows 8, I suppose will depend on what Microsoft has done to their boot loader. If there's significant changes from Windows 7, then it may not work. Otherwise it should.
One issue you should be aware of when using Wubi is that because a lot of people have dropped Windows altogether, Wubi installs aren't quite as well tested as normal Ubuntu installed directly onto your harddisk. Which drive you install it to is irrelevant to Ubuntu, except, obviously, it needs to be available so don't install to a removable drive. :)
If you do have some extra space on your drive, though, I'll always recommend a normal install. It's just as easy, though you will need to write a CD or make a bootable USB stick.