Problem with folder rights.

Hello, i have a problem.

I have just started giving webspace to a couple of friends to help
them out.

Now, following problem occurs:
They were able to "spy" on eachother with the default chmod setting
for the user dirs.
So, when i changed it that only the owner can look into the
directories, this was taken care of. Problem is, now the HTTPD can't
read the directories anymore, returning error 403 when trying to
display a page in a user directory.

I have never before faced the whole thing with rights and groups, can
anyone tell me what chmod and group settings i need to set, and how to
do it?

Thank you.