I am on Ubuntu system, and I want to create "limited" user. I want all processes started by this user to have lower than normal priority. It would be great if I/O priority could be decreased as well (but it is not a must).
You do do this using Pluggable Authentication Module (PAM) limits. See this link. The default configuration file is /etc/security/limits.conf
If ubuntu has file
/etc/security/limits.conf like fedora then you can define the limits without any problem. See if that file exists. There is extensive help and examples in the file that you will understand how to define limit. Specifically you want to assign max priority limit for some user.