Without knowing the following, I'm just guessing:
How will your users be accessing the box? SSH, browser, FTP, mail client, mitosis?
Will this be their exclusive access method, or will they also be accessing from other OS's such as Mac or Windows?
How did you create the users, or have you created them yet? Do you intend to run a database, or will this be a simple user system with real users?
So, to answer 1 possible situation:
If your users will all be accessing the machine locally (from the same computer that SuSE is installed on) and no networking will be involved, then I'd just:
create the users. If you use useradd, then you can specify which directory is their home directory. This won't necessary jail them, not with just this setup, but it will prevent them (if you give the other directories the right permissions) from accessing the other /planet/users/* directories.
There is an application floating around the world called 'jail' that does just that. It actually creates a simple filesystem within the user's home directory so they can use it as if it's an entire new distro install. It's very limited, but does provide some usefulness.