magmatic.com - Squawk Box

There have been reports that if you have guest accounts enabled in Leopard and perform an upgrade to Snow Leopard accounts will be reset in the same manner that guest accounts are. It is recommended that guest accounts be disabled before upgrade. After the upgrade setup guest accounts in Snow Leopard if needed. It is of course my recommendation that you never use guest accounts except in exceptionally controlled environment.

An alternative to guest accounts is setting up an managed user account with no password and using Parental controls to apply restrictions, one downside is the account will not reset. If you do experience a reset of user folders you can do the following to restore them:

Restore the entire system from Time Machine.

Restore just the home folder. (This requires additional procedures.)