Comment 6 for bug 220697

I can confirm this, too. What was really annoying, was that I had just added a dozen students to the Edubuntu server, and then poof... gone. What is weird is that I did notice that it created unique groups for each user (I had not assigned them to a single group). But no entries were created in passwd or shadow files, just group. And all entries have a valid shell. Everything was working in Gutsy before I upgraded. I did manage to add the users via Webmin though.