I reproduced it with d-i and selecting 'Encrypted Home' (LVM or not doesn't 
matter)
syslog (attached) contains the following warning:
 finish-install: warning: /usr/lib/finish-install.d/06user-setup returned error 
code 32

the user is not created at all (no home directory, no password entry
added)

** Summary changed:

- User not created with LVM and encrypted home partition
+ User not created with encrypted home partition: user-setup exit code 32

** Also affects: debian-installer (Ubuntu Oneiric)
   Importance: High
     Assignee: Brian Murray (brian-murray)
       Status: Incomplete

** Attachment added: "syslog.gz"
   
https://bugs.launchpad.net/ubuntu/+source/debian-installer/+bug/820460/+attachment/2267925/+files/syslog.gz

** Changed in: debian-installer (Ubuntu Oneiric)
   Importance: High => Critical

** Changed in: debian-installer (Ubuntu Oneiric)
       Status: Incomplete => Triaged

** Changed in: debian-installer (Ubuntu Oneiric)
     Assignee: Brian Murray (brian-murray) => Canonical Foundations Team 
(canonical-foundations)

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https://bugs.launchpad.net/bugs/820460

Title:
  User not created with encrypted home partition: user-setup exit code
  32

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