I am running Ubuntu 9.1 on a Sun Virtual box and I use this virtual machine to browse the net. My host OS is Windows XP. I am running my anti-virus, anti-spyware application on the host OS only. Does this provide me security while I browse using virtual machine also? or I have to do something else? Also, does using a virtual machine (esp with Ubuntu) provide me any extra security as I believe there are less viruses written for this OS compared to XP.
The short answer: the AV on the host machine, doesn't protect the guest machine (VM).
As for Ubuntu security vs XP security: yes, it is true that there are less viruses written for linux, and there are less known exploits and attacks against linux. This doesn't mean linux is completely safe, but it is way safer than XP.
Your virus checker will not scan your Ubuntu virtual disk, normally you would have to install a seperate virus checker in that OS (as I have in my Windows 7 VM running on a Snow Leopard host).
You will automatically have more security in Ubuntu (not because of the VM setup though), mainly for the reason you state (less viruses). There are virus checkers available if you want to use one, though. Something like Clam should do nicely.