If you delete the home folder then the chances of recovery is nil.
Once you delete the account with saved home folder, the home folder is saved in ~/Macintosh HD/Users/user (Deleted)
Now,
sudo mv "user (Deleted)" user
and get back to the system preferences and create an account with the same user name. Leopard will inform you that a folder of that name exists and will offer you a chance to use that folder as home folder for the new user. Accept it. Voila you get back the old user.
