You can simply make a copy of the .u1conflict file and rename it. If there are more of them, then you might want to open them and see which is which. Nothing is lost. That's what the .u1conflict files are for.
This can happen if you're working directly in a synced folder with an application that automatically saves, like LibreOffice Writer. I think what happens is that while you're uploading the previous changes, LibreOffice changes your local file. That means that the file you are uploading is not the same as the local file and not the same as the file on Ubuntu One. It's not perfect, but the internet does not work in absolute time, and syncing is very difficult. I think Ubuntu One does the right thing. All collaborative tools must have a way of handling conflicts. Whether you're syncing contacts between mobile phones or working on source code in a version control system, conflicts will happen from time to time and it really needs to be handled by a human being. You really don't want the computer to judge which version of your document has the best content.
The only time I have experienced this was when working on a LO Writer document directly on a synced folder. I've stopped doing that, and now instead work on an unsynced folder and then copy the file to a synced folder. I believe you can prevent it from happening by reducing the autosave frequency or deactivating it, but I haven't tried that myself. In my case, LibreOffice Writer autosaved every two minutes, and because of bad connection, it took three minutes to upload the file. Then it makes sense that there will be lots of conflicts.
But as I said, the conflict files are plain copies of your files, so nothing is lost.