what exactly is ultrapeer?

First you have normal connections to everybody and LimeWire sends and receives searches and search results to everybody .

Suddenly it stumbles upon a LimeWire client running in Ultrapeer mode .
Your LimeWire immediatly drops all it's connections exept for that Ultrapeer and sends an index (a list) of your files to it .

This is good because no searches and no search results are going trough your modem .
The Ultrapeer handles all searching , search results , matching , ...

The only activity you will see in your modem is when someone downloads a file from you or when you start searching and downloading .

So if you are on a slow 56K (phoneline) this is a blessed thing .
It can however be a curse if you have a T1 for just 2 PC's (my situation)