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On Debian-based systems, you can use "adduser" instead of useradd. I do not know if it will make it anu easier to get your script working. This list posting describes the differences between adduser and useradd: http://lists.debian.org/debian-power.../msg00215.html
At least with some distributions, useradd expects the encrypted passwd with the "-p" flag. I usually just run useradd without -p and then run "passwd username" as root after to set the password. You could also get the encrypted version of the password before running useradd and then use that string with the -p flag I think.