Personally I'd use GParted (partition editor) from the Ubuntu Live CD and delete the bad install leaving a blank partition, then I'd restart with the live CD again and just select "Use the largest continuous free space".

NOTE: If you tried to boot to windows at this time rather than using the Live CD you wouldn't be able to because the MBR is messed up with no Ubuntu install.

Then Ubuntu does it's thing while leaving your other occupied partitions alone.

That allows me more milk and cookie time :^)