I chose to do the Wubi install because it was short, simple, and easy to reverse (no messing with partitions required). To be honest, I can handle the lack of a hibernate function.
I haven't really heard many other benefits of installing on a separate partition than hibernation and negligibly faster hard disk read/write. Yet almost everyone I encounter seems to have opted for the disk installation. Are there more benefits I should be aware of, especially as a college student who wants a fast, efficient machine for documents, web browsing, etc. (nothing big like gaming, I can run that on Windows)?
Also, I have a fair amount of settings and packages installed that I spent a bit of time on and would rather not have to do again. Is there any way I can migrate all of these settings from the virtual disk on my C:/ drive (Wubi installation) to the disc installation in another partition? (I have a 16GB USB drive if that'll do the trick)
Wubi doesn't change or alter your partitions, it installs to a virtual partition (a file) on the Windows file system. This is good if you just want to try out Ubuntu, and it's easy to uninstall.
If you want a normal dual boot then you can use the Ubuntu CD/USB to partition during the installation. If you have Window Vista/7 then I would create the free space first, before attempting to install Ubuntu.
If your intention is to test Ubuntu, the you can boot from an Ubuntu CD/USB in live mode, and select Try Ubuntu, just to make sure that it's compatible or to see if you need any special drivers for your hardware.
Advantages
Disadvantages
Wubi isn't virtualized. It's simply an alternative bootloader solution. It works by using a special bootloader that can be chained from NTLDR or BOOTLDR. From there, it loads the Linux kernel and a modified initrd (initial ramdisk) containing FUSE and ntfs-3g into RAM. The initial ramdisk's boot scripts will use ntfs-3g to mount your Windows partition, find the Ubuntu virtual partition and then loop-mount it. It'll then use the 'bind' option to remount the NTFS partition under the newly-mounted virtual partition's /host, perform a chroot to the virtual partition, and then exec() the /sbin/init or whichever therein.
None of which requires virtualization, nor is any of it a new technique. Ten years ago ago, DragonLinux (based on Slackware) supported essentially the same virtual partition technique, but instead using LOADLIN through DOS. It also supported simply installing into a subdirectory on a FAT partition, where special hidden files were used to store POSIX attributes (This was called "umsdos" filesystem, and was removed from the kernel in 2.6.11)
Also, depending on the condition of your NTFS partition (number of files, fragmentation, other factors), your performance hit may be slight, or it might be quite dramatic. In the worse case, a Wubi install may only yield disk performance equal to 5% of an install into a native partition (but your chances of experiencing such horrid performance are next to none.)
I'm not sure about migrating your setting, as I have never done that and haven't used WUBI in a long time... However, benefits of a disk install include using more space. From what I remember, you can only use a certain amount of hard drive space, of course- because Windows would be on there, but in addition, I think it is limited even further.
Not to mention Wubi is still a form of virtualization, and I don't believe you have full access to your hardware (i.e. I think it limits RAM and VRAM, etc).
WUBI would be good to try out to see the difference... But if you are worried about migrating settings, just don't change the OS that much so you won't have to repeat everything again if you decide to partition and do a disk install.