If you just press "up" without typing anything first then it works as you expect. I find ^R annoying if I've already started typing the command and then realise I can search the history (although that's probably configurable).

Once you get used to it, the only downside of up/down history search is when you ever use a shell that doesn't do it and you feel lost.

On a standard Ubuntu install: If you press ^R after already typing part of what you're searching for, and then press a key (space, or more of the command you're searching for), then it'll switch to the history-search mode with that value pre-filled in.