A really good way to backup all your users home folders is to use Network Home Directories where their entire home folder resides on your server. However if you have a slow server, network or too many users an excellent option is to use Portable Home Directories (PHD).
Using PHD the user’s home directory is synchronised to the server only at login and/or logout. This greatly reduces the network traffic, allows the user to leverage the full power of their workstation while also ensuring their data is backed up. Great for users who primarily use one machine and mobile users with laptops.
The following instructions are taken without permission from the Apple Discussions list. Many, many thanks to Derek (DY-E)!
NOTES
If a person tends to use the same machine the majority of the time, PHDs are very suitable
The first time the user logs in after turning on PHD’s, the user will be prompted to set up their PHD account (copying all their server settings, to a local account).
Network traffic is cut down to virtually nothing after setting up PHDs. People can start to use iTunes again, without fear of bringing the system to a grinding holt (iTunes from home directories, basically streams the music across the network)
Here are my top tips for setting up Portable Home Directories:
-Go to Work Group Manager
-Click on Accounts
-Click on the ‘Groups’ icon (the icon with lots of people)
-Select a group of users (e.g. “Students”)
-Then click “Preferences” at the top of the window. This is the preferences FOR that group (e.g. if you click on a group called “staff”, you’ll get a new set of preferences displayed on the right)
-Click MOBILITY in the preferences window on the right
-Set Syncronization: Manage: to Never
-Click on the Rules category
OK, in the RULES category, is where the action is:
-Under Login & Logout Sync, Set: Always
-Sync the “~” folder (i.e. the whole user folder)
-Skip items that you don’t want synced. Over time you’ll develop a long list of everything that you don’t want the server to waste time with. E.g.: Library/Caches, Library/Logs, some of the Application Support folders (but not all of them), some Microsoft User Data, Trash, Music, Font Cache, etc.
(if in doubt, you can fiddle with this later)
In the RULES category, in the Background Sync sub-category, you can set your Macs to be managed, to background sync every 60 minutes or less. I HAVEN’T selected this, as I see this as over-kill. (So I say set “NEVER”)
In the RULES category, in the OPTIONS sub-category, I set Manage to “ALWAYS”, and Sync Background Folders to ‘manually. This gives the user some control if they want to do their own sync, from the ‘Home Folders’ pull down menu.
Click back on the ‘Preference’ button. Now go to the ‘Dock’ preference, if you want to send out some standardised Dock settings. And also go to the Software Update preference, if you want to push out Software Updates via a Software Update Server. (This is separate from PHD, but useful to set while you’re at it).
Now, that’s the server leg work done… (Shouldn’t take you long, and you can tweak it later).
Next go to your first “workstation” machine.
-Log in as the user (let’s called them “John”). Once in John’s account then:
-Go to the System Preferences -> Accounts
-Unlock the Accounts pane if locked (probably will be)
-There should be an option listed to ‘Create mobile account’
-Enable this option, and click ‘Configure’
-Enable the option within ‘configure’ to Show Status in menu bar — this gives the user a bit more control to do syncs when they want to
-Click OK
-Log out of John’s account
-Log back into John’s account
-You should be prompted to create a portable home directory user account on the local machine. DO accept this option, otherwise, the local account won’t be created.
If the user has very few files, the first sync will be very quick. But if the user has 2+ Gig of files, the first sync will take you many more minutes, depending on your setup, and load… Luckily you get a progress bar of how the syncing is going.
If you have the option, do the syncing at a quiet time, so you can watch the loads more carefully.
Worth noting, that if you stop the INITIAL sync (there is a STOP button), you’ll have to start the syncing process for the user RIGHT from the start again. I.e. no data is kept on the local machine in that case. But this is JUST for the first sync, while it sets up the user account.
If you let the INITIAL sync get all of the way through, you’ll then notice that the sync starts all-over again, and checks to make sure no files were missed etc. (This would be the “normal” sync). When this normal sync is in progress, you can stop the sync, and it will catch up again on the next sync.
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OK, that’s the sync basics in place. From there on in, user John’s account should auto sync at login and logout. The user can stop this sync if they want, but their data isn’t backed up. Hence I tell the users this… If you want your data backed up, let the computer sync it!
The user can also sync at any time, using the pull down sync option (looks like two little houses) in the menu bar.
The only sticky situation you might get into, is if the user logs in as a normal “network” user, on another computer, and does some work there.
(They don’t appear to be able to log onto their “normal” computer as a network user now — they can only log into their normal computer as a “local” portable user now. But they can still log into other computers as a bog-standard network user).
The next time the user (say John again), logs into his “normal” computer which has his local Portable Home Directory account synced there, he will probably get a prompt asking if he wants to:
-Sync is Network Home directory
-Sync the Local Home directory
-Sync Later (defer the decision)
If the user HAS been working on another computer, they should select “Sync Network Home”. (Copies network files back onto their local Mac account)
If the user HASN’T been working on another computer, they should select “Sync Local Home”. (Local files are kept and synced)
And if in doubt, Sync Later. (Nothing is synced).
The user doesn’t seem to get this prompt often; usually only when they’ve used another computer… But it’s worth warning you and your users about this, just in case 
Well, hope that explains the system, and that this info helps
Oh, before I forget… Other observations:
-When syncing a user for the first time, things like their Dock and Finder window settings are not synced for some reason.
-Try logging in and out again, to see if these settings are synced.
-If not, copy the specific settings files (e.g. the dock settings) from the Network account (network -> username/library/preferences/), back into the local account (same path, but local: Mac HD -> Users/username/library/preferences)
-then logout and log back in again, and their Dock settings will return