I am using Debian but this solution should work fine with Ubuntu.
You have to add a line in the neo4j-service script.
Here is what I have done :
nano /etc/init.d/neo4j-service
Add « ulimit –n 40000 » just before the start-stop-daemon line in the do_start section
Note that I am using version 2.0 Enterprise edition. Hope this will help you.