I've applied the diff.
The defined users are now being created, but only when their primary group is 
created first using the groups statement.
The users are also correctly added to the specified additionals groups.
 
I've pasted my userdata below:

#cloud-config

groups:
  - ansible
  - sysop

users:
  - name: sysop
    gecos: "System Operator"
    primary-group: sysop
    groups: "sudo,adm"
    shell: /bin/bash
    lock-passwd: false
    passwd: <redacted> 
  - name: ansible
    gecos: Ansible
    primary-group: ansible
    groups: sudo
    shell: /bin/bash

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https://bugs.launchpad.net/bugs/1562918

Title:
  cloud-init does not create defined users

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