I am installing Ubuntu on another computer in my house. I have downloaded the iso file and am going to put in on a usb using Unetbootin.
What is the rule of thumb for deciding how much space I should use to preserve files across reboots?
You can either leave space to preserve files or simply set it to 0, so everything you do is erased upon reboot. Let's consider some factors:
1. Will you use your USB drive to store things other than the Live system?
2. Will you use the Live system just to test/install Ubuntu or will you use it to work?
If you're going to use the USB drive to work AND store files you could make two partitions out of it, one for the Live system/work files and another for storage.
If you're going to use it only to test/install Ubuntu and will store files, set the persistency size to 0 and make two partitions. If you eventually need to save a file inside the Live system simply save it in the other partition.
If you'll use it to work, you can max out the persistency.