When installing windows 7 it creates a small system partition. Does the Ubuntu install create a partition like this? Do I need to alter this Windows 7 partition (size) ?
Ubuntu will create all the partitions it needs, regardless of whether you decide to dual-boot with Windows 7 or not. The setup program will ask you if you want to dual-boot or simply wipe out Windows and install Ubuntu. If you're especially into all this stuff, you can still control the sizes of the partitions Ubuntu creates.