i have this "empty users & groups list" too, on a reinstalled 8.04.4. (it was 
working before, with 8.04, which i used for years until i gave the 10.04 
upgrade a try... :) hence the reinstall...)
i have added users and groups manually with adduser and other commands (also 
with webmin). the /etc/groups and /etc/paswwd files are intact. the grpck 
doesn't find any problem either.
i have to note (as in many other cases it seemed to be important), that i'm 
using the desktop over a vnc connection. i had to unlock several things in the 
policy kit to allow me to access several "admin tools", such as users and 
groups. but it only affected the unlock button, as far as i can tell. i don't 
think the users&groups app would display anything if i'd log in locally (not 
with vnc), but i can not test this.

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[users-admin] [HARDY] erasing /etc/passwd and /etc/groups when failing to load 
configuration
https://bugs.launchpad.net/bugs/234473
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