The script calls grep without arguments one time, because @filelist includes '/home/sites/$arg1/users'. A correct solution would be to call find with appropriate arguments: find <path> -type d -mindepth 1 -maxdepth 1. This command simplifies also the script, because you don't need to munge @filelist, and doesn't overload system issuing repeated deep scans of file system.

Ciao, Valerio