On large systems with many users, you need to control the amount of disk space a user has access to. Disk quotas are designed specifically for this purpose. Quotas, managed per each partition, can be set for both individual users as well as groups; quotas for the group need not be as large as the aggregate quotas for the individuals in the groups.
When files are created, both a user and a group own them; ownership of the files is always part of the metadata about the files. This makes quotas based on both users and groups easy to manage.