We tested an Ubuntu 11.04 today regarding this problem.

The conclusion is, that you have to perform tidious, manual commands in
the shell in order to create new users in Ubuntu, if encryption is
enabled. It seems, that new users are born with insufficient permissions
to live.

In order to create a new encrypted user, named "Ann" in a group "Users",
in Ubuntu, you have to add the following commands to your procedure for
creating new users.

cd /home
ls -ld ann
sudo chown ann:users ann
sudo chmod 0770 ann
ls -ld ann

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https://bugs.launchpad.net/bugs/307019

Title:
  ecryptfs Private directory not mounted after changing password in
  users-admin

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