Under unslung, you can can install the adduser package, and it will let you create user accounts using adduser, set passwords with the passwd command, etc., just like on a normal unix system. However, in an unslung system you're still using some closed-source linksys binaries, and they do things to your /etc/passwd file. You will notice that after you reboot, the linksys binaries have changed your /etc/passwd file so that the password for your newly created user has :x: rather than the hash of the password. Normally, this would indicate that the password was in a shadow password file, but the normal shadow password file doesn't exist. The long and the short of it is that you should not use adduser and passwd on an unslung system; you should use the web interface instead. In the web interface, go to Administration > Users.
The web interface sets new users' shells to /dev/null, which means they can't log in to a shell.
Bcrowell, using unslung 6.8, tried using the web interface to create a new user, and found that it still didn't work. The new user was missing from the /etc/passwd file after a reboot.
There is also a way to ChangePasswordsFromTheCommandLine, without using the web interface.