This bug was fixed in the package user-setup - 1.23ubuntu4

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user-setup (1.23ubuntu4) jaunty; urgency=low

  * Install crypto-modules if home directory encryption is requested
    (LP: #309541).
  * Re-enable home directory encryption option.

 -- Colin Watson <[email protected]>   Tue, 06 Jan 2009 00:21:36 +0000

** Changed in: user-setup (Ubuntu)
       Status: Triaged => Fix Released

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Jaunty Alpha 2 Installation: encrypted home directory broken
https://bugs.launchpad.net/bugs/309541
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