There is no way you could run, in a VM, the latest Ubuntu smoothly on a low spec Windows host. You could use a less demanding Ubuntu derivative Linux that doesn't need a 3D accelerated graphical card.
I mean we aren't talking about creating a functional desktop here, all they need is a image that boots runs a text editor and has all the ruby packages pre installed - you don't even run heavy weight IDE like eclipse - this should easily be doable with ~512MB ram image.
But I agree and Ubuntu might not be the best choice of distro for this, especially with that unity monster.