Perhaps that could be if its not able to detect your Windows.
Try to reboot the Live DVD and see if the option is available or not.
If its not, then-
If you want to replace Windows 7 by Ubuntu and dont have any data on the drive then you could use the option-
Erase everthing and install
Otherwise if you have a data partition, you will need to select the option
for Custom Partitioning
if you choose custom partitioning-
Basic Partition Setup
Ubuntu basically needs just 2 partitions for installation:
/ partition (System), Mount Point '/', which holds all the base install. File system ext3/ext4, (ext4 is the default since 10.04 Lucid Lynx) and recommended minimum size is 8 GB.
Make it 30gb-50gb
Swap partition (Virtual RAM), mount point 'Swap'. If you intend to hibernate/suspend your Ubuntu install, size should be 2 X RAM or at least equal to RAM. If you've got large amounts of RAM say 2GB or more and don't want to hibernate/suspend, you can survive without a Swap partition but that is not recommended in most cases.
Make it 2gb- 4gb
If you have any queries please let us know.