upgrading from 2003 server to 2008 server, most user accounts are called USER00000000

I upgraded a X86 Windows 2003 server to X86 2008SP1 server. It seemed to go great. But after running it through the 167 patches, or so I noticed the user accounts were all named USER00000000, USER0000000a, USER0000001a, etc. A couple of applications were having odd behaviors, so I went ahead and deleted the profiles through the GUI, after all of the them were gone, the USER00000### folders were still present, so I deleted them. I had to remove them in safe mode, as they kept displaying 'profile.dat was in use'. So after they were all gone, I logged back in as the local admin and removed my profile, so that it all of the old profiles would be gone. When I went to log on with a domain account (which is in the local admin group) I got an error of 'User Profile Service service failed the logon'.
I have upgraded hundreds of 03 server to 08, in preparation for the termination of support, and none have had their user accounts renamed like this. Anyone seen this behavior, and what did you do?