First, I would like to start by making sure that my understanding of SDL's licensing is correct. From what I was able to understand on the licensing page of SDL's website, SDL 1.2 is licensed under the GNU LGPL. That should mean that a person who wishes to release a SDL application commercially is required to either: a ) have there application linked dynamically (.so or .dll) to the SDL library. or b ) release the source code of your application. Also if the SDL library is in binary form to include the source code (unless its an unmodified version, then you can simply refer viewers to the SDL website).

Does that mean for someone who simply uses the standard development libraries provided by Ubuntu repositories, he would only have to refer viewers to the SDL website?

Second, how do utility libraries (SDL_draw, SDL_image, SDL_timer, .ect) fall into this licencing scheme? Or do they?

I'm uncertain, but I believe that these utility libraries are developed by community members. If this is true, does that mean that they are licensed differently than what is found at SDL's website?

Any clarifications would be great. Thanks for your time!

The utility libraries have their own licences. Most of them are LGPL though. A link to the license is often included in each header file, so open them up to double check. Also check on the project pages for each library.

I wouldn't want to give any advice for what you need to do to follow the license for distribution, but maybe start here: http://www.gnu.org/licenses/gpl-faq.html

It's under the zlib now, that means you can do anything you want without giving credit but you can not change source and claim it yours. They also take no responsibility what you use with it.