I installed Ubuntu 8.04 32 bit in Parallels 3.0 on my MacBook Air without any problems. I just used the Ubuntu option for operating system - I don't remember it asking me about 32 or 64 bit but since Parallels said it had to use 32 bit XP I assumed it was 32 bit for all

It is running great by the way - I changed the full screen option to change resolution and it looks like regular Ubuntu

Have a good one