I think the separate user thing is fine for low-level security between respectful users of the same computer.
HOWEVER... The password protect for user accounts can EASILY be hacked. Easily!
So when it comes to really protecting private files such as a password list, sensitive financial info, nude pics of wife, you NEED a system that is fail-safe and nearly impossible to crack.
Say you die... and you don't want anybody to open those files, EVER. A simply user account won't do. The people cleaning out your estate will very easily have access to do whatever they want with those files. Or say your computer gets stolen... Think about that.
So... The real question is:
What is the most SECURE system to password protect private files.
Well, that's a totally separate question from what the original poster was asking.
Frankly, if you're dead, you'd
want your estate to have your passwords and financial info. And presumably, if you're married, it would
be your wife who would be handling your estate, so any pictures of her would be, well, nothing new.
For theft and everything else, there's File Vault, and Full-disk encryption products like PGP WDE.