No, what it actually means is half of the remaining space available
after accounting for the fact that you've got to get an Ubuntu
installation in there too. The current fudge factor for this is about
2.21GB; (7.78-2.21)/2 is 2.785.

This should all be a lot clearer in Hardy, now that Evan has turned the
auto-resize UI into a slider.

** Changed in: ubiquity (Ubuntu)
       Status: Incomplete => Fix Released

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The "guided" installation option computes new size wrongly when it's going to 
shrink a NTFS partition
https://bugs.launchpad.net/bugs/163541
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