Hmmm, I normally create databases for my users if they need it and grant them the ability to create/drop all the tables they want (full access to said database). I wouldn't want to give them the ability to create new databases on their own. I believe if you want to do that you are going to have to either grant them all privelages (basically a mysql superuser) or set up a separate instance of mysql for that particular user. But I'm not 100% on this....
