I just encountered this same issue on a new Feisty (7.04) install when I
attempted to create a user name of "staff".  As is default in Ubuntu,
USERGROUPS=yes in adduser.conf so each new user gets their own group.
The group "staff" is a Ubuntu default with a GID of 50 so it couldn't be
used.  No messages were displayed by users-admin and I didn't figure out
what the problem was until I tried to use adduser which informed me the
group already existed.

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"User and Groups" does not inform user that manual UID already exists and 
create user groups.
https://bugs.launchpad.net/bugs/99276
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