I don't know of any follow-ups on or solutions for this bug. There is,
however, a workaround: The desktop CD works just fine (and you can of
course manually add the user using a live cd). I know the live-CD is not
suitable for all kinds of installations, but at least it works...

Here's the thread to the bug on ubuntuforums:
http://ubuntuforums.org/showthread.php?t=1126463

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Jaunty PPC alternate CD fails to create user account
https://bugs.launchpad.net/bugs/378706
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