saman007uk and bosewicht,
Unfortunately, this doesn't work, although, intuitively, it feels as though it should.
The problem is that many of the configuration files (~/dotSomething) contain references to olduser. They do not work when simply chown'd. For example, see the output of grep -r /home/olduser/.*
I suppose you could write some sort of script with sed to change all the references to olduser to newuser within these files, but then there are also some files in /tmp which have the same problem, but this time the change needs to be made to the filename, and in my experience this all turns into a major nightmare!
The only solution I have managed to get to work is to create a new user, set up all those preferences, then copy over data files (eg docs, mp3's), and then chown them. A real pain!