I don't think that this is easy to do. Read up about chroot, but be forewarned that doing a chroot jail securely is a headache to maintain for more than a user or two. In essence, chroot creates an environment where a user sees the directory of your choice (often /home/username) as the "root" directory (i.e., /). But this means that all of the utilities that they need to run (like bash, for example) have to have copies moved into their new /bin directory (or sbin if they need access to those programs). You have to disable certain features in many programs: shelling out to a command line. vi can execute a command line from inside vi, and if you don't disable that, then they can still go where you don't want them to. Mail can do this, too.
In any event, chroot will lead you down the right path.