See If I chose "Replace Windows with Ubuntu", do I lose the other partition too? for a similar question.
Here is a step by step direction for you
Step one: Make two backup copies of all the files and folders from all the partitions in your computer. Since you will not be restoring them in a Windows system, do not use any Windows backup program to make backup. Use Copy to copy the folders. Make two copies preferably in two external USB hard drives.
Step two: Download and prepare the Ubuntu Live DVD/USB and boot from it. Use the Try Ubuntu without installing option. Once Ubuntu loads make sure all the different parts of the computer works. Then plug in the USB drive where you made the backup and make sure you can read and open some of the files. If this step fails go back to step one.
Step three: click on "Install Ubuntu" only when you are satisfied with steps one and two. Use the "Replace Windows 7 with Ubuntu" option during Ubuntu installation.
Warning: This option will delete all the partitions in your hard drive and you will lose all the data.
Once Ubuntu is installed. You will be able to copy back the all the files and folders from the external hard drive into their respective folders within Ubuntu's /home/[user]/ folder.
Answer to your second question: Ubuntu can read most USB drives. However, you can test this while you are trying Ubuntu without installing.
Hope this helps
On your second question: yes, you can copy your windows files from flash to Ubuntu after installation. But beware: files that are connected to dedicated windows programs may not run in ubuntu because such a program may not exist. But things like video's, pictures and most text files will be usable in Ubuntu.
Gd luck
– matv1 Jun 13 '13 at 15:04