Confirmed in Feisty for me. I have had the same problem in Dapper and
Edgy.

Sometimes, I can sometimes get around the problem by instead of choosing Switch 
user do the following:
1. Choose Lock Screen
2. Poke the mouse to get rid of screen-saver
3. Click Switch user
4. Log in as normal for that user.

Since this works and the normal switching doesn't, I think it might be
something related to the fact that screensaver/locking happens
automatically when you switch user and that it might steal the mouse
control when the new X server has been started.

-- 
Synaptics touchpad not enabled for second X display
https://launchpad.net/bugs/68370

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