I've only recently come back to using the Ubuntu One service; I gave up on it the first few times I tried it. For one thing, I wasn't happy with the way it created conflict files here and there. In part, I should have expected such behavior, but at the time, I found it too annoying and just switched back to using my good ol' flash drive.
How are conflict files formed? Let's say that you have a file that Ubuntu One is in the process of synchronizing. If you edit the file while Ubuntu One is still updating it, the service generates a conflict file, typically the filename with .u1conflict appended. Since my broadband service sometimes runs slow, such things happen.
But after thinking about it some more, I decided to jump back into Ubuntu One anyhow. I have three computers -- my office desktop, my laptop, and my Mom's mini-notebook -- and Ubuntu One is starting to make more sense. Even just working with a flash drive across all three computers can get to be a pain.
I don't use Ubuntu One for all my files, just for the ones I regularly use, like my working TiddlyWiki file, for instance, and some documents I'm currently working on. It's good to have them handy on whatever machine I'm using.
So how do I avoid the conflict files? I don't keep the Ubuntu One service running at all times. I only turn it on when I start up my computer, then turn it off after it updates the files. Then, before closing my computer, I turn it on to update again.
That said, always make backups of your files, even when using Ubuntu One. Especially when working with Ubuntu One.