update: i see in the vmail mysql database that my old users are still in there, so i do not need to create any new users.
in the dovecot.log i notice:
Error: chdir(/var/vmail/vmail1/mysite.com/u/r/a/ura-2012.10.22.05.33.20//) failed: Permission denied (euid=2000(<unknown>) egid=2000(<unknown>) missing +x perm: /var/vmail, dir owned by 502:502 mode=0700)
when i examine the vmail folder i see that it is 'owned' by 'vmail' user..
any idea what i need to change here?