You will in effect be splitting your current installation into root and
/home. Your current installation will stay as root and /home will be moved
from /home in root to the new space. It is equivalent to moving it to its
own partition if this was a regular installation. Currently the entire
installtion is not in /home but in root (/). This is normally the way Ubuntu
installs (on one partition), but you can take control and manually install
it across two or more partitions. You can do this during installation if you
don't use WUBI or you can do it afterwards, in both WUBI and regular Ubuntu.