My path to success:

I'm having this problem with an old-ish  Dell Optiplex SX260.

To get around this, I booted from the standard Feisty live CD.  At the
boot menu I chose the option (the 3rd one?) that says to an install with
an updated driver CD.  When I was prompted to put in the driver CD, I
just left the Feisty live CD in and hit enter.  Then I was prompted for
the Ubuntu live CD, and once again (with the live CD still in the drive)
I just hit enter.  This procedure got me to the live CD's Gnome desktop.

The first time I clicked on the "Install" icon on the desktop, the
manual partition editor hung on me.  I killed it from the command-line,
and repeated the process.  This second time I had no problem with
partitioning.  I've completed the install, and booted the newly
installed Feisty from the hard drive, and everything seems to work fine!

-- 
installation fails due to tty error
https://bugs.launchpad.net/bugs/75135
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