On "unstable" "new development" all the way through up to release you can expect Ubuntu to "bork" grub unexpectadly. I just had oneiric ocelot release level image install screw grub on an IBM Thinkpad T40. Install got an "error" on "configuring apt" by which time "install" had overwritten grub but not put a usable image on it. Launchpad bug. I don't expect Ubuntu development to be interested.
If "install" fails it should at least put grub back where it was. Best case would be to leave grub totally alone until "install" is successful. Next best would be to totally update Grub before proceeding with the install. Install's "Ubiquity" is proverbially buggy.
I had to use a Lucid Lynx LTS CD Live image and do grub recovery as in Ubuntu wiki community support. It's a multiboot and all the other images were intact after grub was fixed.
I use the T40 circa 2005 to look for ubuntu bugs. It's supposed to be able to boot from USB however USB support is marginal at best on it.
What I'm doing here is running on this $250 Acer Aspire 1 netbook. (Local Wall Mart had a black model for $200.) It's running precise pangolin on a USB hard drive. It's a left over 2.5" hard drive in a $20 USB case. Nice and quick and responsive. You'd never guess it wasn't running the main hard drive. If the USB hard drive is plugged in, bios is set to boot it, which is precise pangolin at the moment. It's dual booted so there is a oneiric ocelot also on the USB.
On trying "install" on a "development image" I specify the USB hard drive as target for grub so hopefully the main hard drive is left alone.
The 250 GB main hard drive has Windozzzzz... 7, natty narwhal, meerkat, and archive of data on it.
Good luck.
Jerry