Comment 39 for bug 413135

This appears to be a matter of missing code to determine the amount of available memory. I simply took the code to do this from base-installer/library.sh and added it to ubiquity's check-kernels script (see attached patch). I've uploaded a version of ubiquity with this fix to my ppa:

deb http://ppa.launchpad.net/evand/ppa/ubuntu karmic main

Please do the following to test this:
1) Boot the "Try or Install Ubuntu" option off the i386 DVD.
2) Add the above line to your sources.list.
3) Run `sudo apt-get update; sudo apt-get install ubiquity-frontend-gtk=2.0.3~evand`
4) Launch ubiquity as usual, you should get a pae kernel on reboot.