Same here while upgrading from 10.10 to 11.10 from Live USB. The upgrade
process did not recognize the existing users and offered to create a new
user, without the possibility of skipping this step. After the
installation process finished and booting into the "new" system, the
/home directory is maintained but the previous users are gone.
Recreating the users fixes the issue, but the UIDs/GUIDs are all broken
and you need to fix those too (chown does the trick).

Quite annoying for people upgrading from older releases with the Live
USB/CD option. Remember that this is the only way to upgrade from older
releases in a single step, without having to go from 10.10 to 11.04, and
then to 11.10.

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https://bugs.launchpad.net/bugs/221618

Title:
  Hardy installation fails to see previous Gutsy or import user home
  folders

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