I'm setting up a Web Server with OS X Server (10.2), and have been having problems with creating users with directories accessible from FTP. In the provided Workgroup Manager, you can set the home directory of a new user but nothing is created initially. Instead, it waits for the user to log in through AFP before creating it, which for a web server, is not exactly convenient.

Fortunately, Apple thought of this problem ... after several days of researching various materials, I found that you can run a program called "createhomedir" in Terminal and all the home directories will be created for you. Here's the steps I took:

1. Open Workgroup Manager and go to the Users section
   
2. Create a new user
   
3. Click on the "Home" tab, and select the "local" radio button
   
4. Click save, then launch Terminal
   
5. In Terminal, type "sudo createhomedir --a"

That's it, you're done! There are some other options for creating home directories, just type "man createhomedir" to find out what each does.