This is because you are running a GUI. I don't know if the Ubuntu liveCD has a console or not, but you need to stop X, install the driver, and restart X.
Originally Posted by FutureSuture
To stop gdm (and X in the process):
This should bring you to a text console (just a guess), and from here you can log in and install the driver.
sudo /etc/init.d/gdm stop
Those are rather general instructions, and I'm sure someone running Ubuntu could be more specific.
sudo /etc/init.d/gdm start