I've gotten that grub> prompt before when trying to write a live iso. It sounds like the live usb wasn't created quite right, usually the live iso's (especially Ubuntu's) have pretty menus and even a timer that will automatically start it in a few seconds, getting a grub> prompt means it didn't load the menu correctly. I don't think it's related to the boot options since it did get to a grub> prompt from the USB, so at least that's good.
There's probably a way to edit some files on the usb to get the menu to show up correctly, but it's far easier to just write the iso to the usb again with a different tool that will hopefully work correctly this time.
If you can boot another Ubuntu try using ubuntu's usb-creator Ubuntu Documentation Installation/FromUSBStick
Or if running in Windows try PenDriveLinux.com's Universal USB Installer
Or also for windows try Linux Live USB Creator (also linked on the Ubuntu Installation/FromUSBStick page above)
Usually that unetbootin tool is supposed to at least work, but I've found it doesn't use the regular (nice) menus that the iso creators have setup
Of course, make sure the iso file doesn't have errors, check it's MD5 or SHA1 against what it's supposed to be.