since kali 1.6 until kali 2.0 (sana) , i am pretty sure that kali on usb gives errors in most of cases !
except if you created your live usb using DD on a linux box.
sudo dd if=/path/to/kali.iso of=/dev/sdX
i can't tell you that if you're installing last kali distro (2016) i haven't tried it yet!
but as suggestion here's another way to install it while running ubuntu :
simply install KVM and use the folowing command :
kvm -cdrom "/path/to/kali.iso" -hda "/dev/sdXY" -m 1024 -boot d
/dev/sdXY is the partition where you want to install kali-linux e.g /dev/sda3
Note : while you already have another linux installed (ubuntu) , you can skip/ignore grub_installation step , at the end just update-grub on ubuntu!
i hope this will help :)
updates
you don't have problems with previous commands ! but you're confuse how to chose your 16gb pendirve and how you deal with partitionning step !
in a terminal run: lsblk

as you see in the screenshot you can identify your 16GB.
for example if i was going to install on my 4GB(3.7G) i'll chose /dev/sda , if my pendrive was the one which have SIZE=465.8G i'll chose /dev/sdc and so on .
Q : why /dev/sdX and not /dev/sdXY?
A : because your are going to install on a pendrive and you are going to use whole of it , if you were going to install on a partition inside your hard drive that time you'll use /dev/sdXY ,( and also you'll have chance to ignore/skip grub-install step if you already have another linux with bootloader on your machine )!
i started installing kali-linux-light-2016.1-amd64 on my 4g(3.7g) pendrive to get screenshots !
and my command according to my pendrive(3.7G) and my iso is :
kvm -cdrom "/.img/kali-linux-light-2016.1-amd64.iso" -hda "/dev/sda" -m 1024 -boot d
sure you don't have problems with first steps , you can go directly to step 9
1)

2)

3)

4)

5)

6) any hostnam you like i recommand to make it unic in case you wanted to change it later using scripts you won't mess up other files inside /etc.

7)

8 )

9 ) manual to know what you're doing .

10) select your 16G .

11) here make sure of (use as ext4, format yes, mountpoint / , bootflag on)

12)

13)

as you saw i ignored swap because you can creat a virtual image file for swape insteed of eatting pendrive space .
14)

15)

if you chose yes it will tell you enter HTTP PROXY infos of course you don't know what to put there , simply leave it blank , but at the end you'll have to add kali repos manually in /etc/apt/sources.list
http://docs.kali.org/general-use/kali-linux-sources-list-repositories
16)

17)
18)

it will take a moment in removing live pakage
after installation ends boot into your new installed kali from there using kvm :
kvm -hda "/dev/sdX" -m 1024

in case you wanna creat swape here's the way :
after you boot into new installed kali inside pendrive
sawp: 1) creat empty raw image:
sudo dd if=/dev/zero of=/.swap.img bs=1M count=512
this will give 512 mb (control size trough count=XX)
swap: 2) add it to fstab:
use nano or any text editor open /etc/fstab
add the following line to it
/.swap.img none swap sw 0 0
related to step 15 :
from new installed kali delete anything inside /etc/apt/sources.list and add following 2 lines to:
deb http://http.kali.org/kali kali-rolling main contrib non-free
deb-src http://http.kali.org/kali kali-rolling main contrib non-free
while you still in your new installed kali please install ralink in order to use wifi with the following command :
apt-get update ; apt-get install firmware-misc-nonfree
adding normal user :
adduser newusername #creat user
addgroup newusername #cerat group
adduser newusername newusername #add user to the group
adduser newusername sudo #add user to sudo group to be able to use sudo.
finally i think this should help you as i hope so :)