I was configuring the people search and found this article which explains it in great detail.
Basically you need to go to SSP: User Profile and Properties : Configure Profile Import. Once you’ve set this up here you then click on Start full Import to pull them in. You can set a schedule here too to crawl it in at required rate, I'm not sure of the performance issues as yet if you do this frequently but imagine it'd be quite high!
I did add some new AD users and crawled them in, they all appear in the User Profiles within the Central Administration console.
But, if I do a people search for them they do not appear.

This was a great article on custom configuring the Import Connections for Active Directory. I ran this on command prompt to show a search for 'gareth*' in the system:
C:\Documents and Settings\Administrator>ldifde -f c:\usersindomain.txt -r "(&(objectCategory=Person)(objectClass=User)(cn=gareth*))
and it returned:
Connecting to "awhsvsp01.AWDEMO.COM.AU"
Logging in as current user using SSPI
Exporting directory to file c:\usersindomain.txt
Searching for entries...
Writing out entries.
1 entries exported
The command has completed successfully
So it returned the result I was after.
I also had a look at the Scope Properties and Rules for the 'People Search' scope:
It states that there are 35 people in there which is correct.
So I'm really not sure what is up here! I've been reading a bit around the web, but there doesn't seem to be much out there on this feature of SharePoint. I've even flicked through the books I have and they don't appear to be in there either!
Removing People
I read a
forum post which also highlighted that it will not remove results from People Search when people are removed from AD for 3 consecutive full crawls:
"this is to allow for situations where content may temporary be unavailable due to network or connection issues. If the items were removed each time it would cause them to re-appear as 'New' items when the connection was re-established which would be incorrect."