I think asking for this during install or after first boot is a very, very good idea. 100 bonus points if that also includes handling e.g. browser history and IM logging. It doesn't have to be complicated (to the user), just over the usual 4 options:
- Max logging
- Default (14 or 30 days browser history, no Zeitgeist)
- No logging
I think the various smartphone and facebook scandals might be leading to increased awareness by normal users such as those targeted by Ubuntu.