This post shows that a new feature of Ubuntu 7.10 is causing confusion for a few users. Really the feature is an implementation of the XDG Base Directory Specification from Freedesktop.org.
This creates specific directories for user files, allowing XDG compliant applications to search in these locations automatically. It also allows for localization (that means translation into the language of choice) of these directories without losing the benefits of standard location -- it's done on the fly during login and the location of the files is kept in a standard configuration file.
The upshot is that new users can move all their music to the Music directory and expect that newer audio players will know where to look for the music library. There won't be as much of a need for first-time wizards and the like. Rhythmbox will be ready with your music collection the first time you start it. Talk about ease of use!!!
My suggestion to older Ubuntu (and other Linux) users? "Move (or link) your files to the standard locations. Freedesktop.org has improved the desktop Linux experience by ten-fold. Accept the standard and work within it."