Create bootable ISO from Live USB

You should reconsider the overall question and do as Thiago M suggests. A Live CD needs to be configured to boot and pass off the boot sequence in a manner that differs from USB thumb drives. There is a similar question about migrating between different thumb drives on https://unix.stackexchange.com/questions/14435/cloning-a-bootable-usb-stick-to-a-different-size-stick is currently being discussed. That technical challenge is much simpler than moving to a CD and it is quite complex so I would punt.

You can download the image from the Ubuntu website and burn it to a CD, it will be a bootable Live install.