If you have everything on one partition now you will have to back it up and
then go ahead with the custom installation making two partitions from the
available space.

You need to do a custom installation. One partition will be used for the
root files system (where your applications are installed) and the other will
be used for your home partition (data and settings). In the custom
installation you format the root partition to the file system of your choice
(ext3 or ext4) with the mount point /. You do not format the /home partition
unless it is empty (your first time). ie. The first time you do it, you need
to format but if you intend to re-use it you don't. You need to choose the
file format (ext3 or 4, depending on what you originally formatted it as)
and set the mount point as /home.

here is an example:
Say you have one drive sda which you divide into two partitions sda1 and
sda2. Use sda1 for root and choose the file format as ext4 and the mount
point as /. Use sda2 for home and choose the file format as ext4 (if it was
ext3 before you can keep it as ext3, otherwise it will be converted to ext4)
and set the mount point as /home. Format both if it is the first time and
only format root if you already have a second partition with its own /home.
(Note: there is a box to check for formatting. Choosing the file format does
not imply that you intend to format it which wipes it clean. You actually
need to check to box to wipe it and start fresh.)

If you have a separate home partition already you must set the mount points
as above and use the same username. When Ubuntu loads it will load your old
user settings and all of your data will be there because you have the same
user name and have not formatted.

My username is abc. I re-use it and would change my password or not. This
would create the link to /home/abc where it will store my files and
settings. If it previously exists it will simply re-use what is there, which
is the beauty of having a separate home partition. Alternatively you could
create a new user account and move your data from the old. Let's say, my old
account was abc, but I don't want to use all of the data and settings for
some reason, perhaps it is messed up. I can create a second user account to
the same mount point such as abc2 as my new user name and move things over
at my convenience.

I used to use this method for all of my distributions. I had one large home
partition and had abcu for Ubuntu and abcm for Mepis, abcf for Fedora etc. I
could move files around as I saw fit from one home folder to another.

If this is your first time, you can copy all of the files from your backed
up /home folder to your new one and they will be used as if it was your old
/home folder. The exception to this is Thunderbird. For some reason it needs
to be started before you add your backed up files or it will overwrite all
of your old messages and account settings the first time you use it. I don't
know why. This does not happen if you are reusing the old /home folder.

You will have to re-install any programmes that do not come with Ubuntu.
However, there is even an easy way to automate this. You can back up your
application list to a text file and apt can be made to re-install everything
on your list.

This sounds more complicated that it actually is.