In 1.2, users are defined solely in the "users" table.
In 1.3, users have to be defined at the database level *and* exist in the users table. However, when upgrading from 1.2 to 1.3, the users remain in the users table, but don't get created as database users.
The consequence of the above is that it's not possible to create the "same" users again: when the user is being created, it's already in the database and the procedure fails.
Proposed solution: add a step to setup.pl which asks the admin which users he wants to "migrate" (ie. create database accounts for). These users will get default passwords with 24h validity, just like any other admin-set password. This procedure seems much more user-friendly than the problem that ario (on irc) ran into where he simply can't create the old user names anymore.