I have read that a 2GB flash drive is now minimum for a Live install. I have not confirmed this.

Alternatly you can boot the 712 MB Ubuntu iso image using grub2. MultiBootUSB has script for doing this.

The problem you're having is that is file you downloaded is corrupted, hence, not useful.

To solve this, download Ubuntu again. Once done, try again. You can follow the Official Guide for OSX:

1: Download Ubuntu

2: Convert the ISO file

Convert the .iso file to .img using the convert option of hdiutil

hdiutil convert -format UDRW -o ~/path/to/target.img ~/path/to/ubuntu.iso

Note: OS X tends to put the .img ending on the output file automatically.

3: Determine the media to install

Run diskutil list to get the current devices. Insert your USB and the run again diskutil list. The new device its your USB.

4: Install into the USB

Unmount your device (not physically) with diskutil unmountDisk /dev/diskN where N is your USB number and execute

sudo dd if=/path/to/downloaded.img of=/dev/rdiskN bs=1m

Notes:

• Using /dev/rdisk instead of /dev/disk may be faster
• If you see the error dd: Invalid number '1m', you are using GNU dd. Use the same command but replace bs=1m with bs=1M
• If you see the error dd: /dev/diskN: Resource busy, make sure the disk is not in use.Start the 'Disk Utility.app' and unmount (don't eject) the drive

5: Eject

Run diskutil eject /dev/diskN and remove your flash media when the command completes.

6: Boot

Restart your Mac and press alt/option key while the Mac is restarting to choose the USB stick.