Standard Users and Admin can access other user profiles via Home.

The reality of life is that as computing stands, once you have physical access to the computer, its pretty much owned. Encryption can mitigate the data loss. As an analogy, making the users folders not readable is akin to closing the window to the house (sensible), but leaving the door open.

For example, you might configure it such that the system does not have viewing rights, but this is enforced purely by the OS itself. Boot to another OS (eg off a USB key), and then this enforcement is no longer possible. You could lock the boot order in the BIOS, but someone with physical access could remove the HDD and put a new one in, or just take the HDD elsewhere and read its contents.

If you are truly worried about it, then I recommend home folder encryption -- this actually secures the data to anyone without the decryption key. However, if you wish to simply mitigate the problem a little, open a terminal and run (cut and paste, this assumes no users have a space in their name)

for i in `ls /home/` ; do if [ -d "$i" ] ; then ; chmod ag-rwx $i; fi; done

This will make the directories not readable. You can achieve the same effect by running nautilus as admin (gksudo nautilus), selecting all the home folders, and then disabling read/write/execute permission on for group and other in the permissions tab.

oops, lets try that command again:

for i in `ls /home/` ; do if [ -d /home/$i ] ; then echo "Changing permissions on /home/$i"; sudo chmod ag-rwx /home/$i; fi; done

Oh, last point -- encrypted home directory:
https://help.ubuntu.com/community/EncryptedHome

Arg. one more time.
for i in `ls /home/` ; do if [ -d /home/$i ] ; then echo "Changing permissions on /home/$i"; sudo chmod og-rwx /home/$i; fi; done

+1 for the permissions-changing command and suggestion to encrypt home folder. But...

@mycae said:
"The reality of life is that as computing stands, once you have physical access to the computer, its pretty much owned."

That's really not relevant to this question, because users by default have access to most of each others' files when logged in remotely, too. This question is not specific to a behavior that is tied to local use of the machine.

Also, there is a range of different things that "physical access" can mean. To own a properly and securely configured kiosk machine, for example, entails significantly more than sitting down in front of it.

The actual reason for the default policy of allowing users to enter each others' home folders and view the contents of most of the files there is https://wiki.ubuntu.com/SecurityTeam/Policies#Permissive_Home_Directory_Access.

Since 11.10, there is a special Guest account at login, which provides no access to home folder.
Could you explain what is your need.
E.g. in classical Unix, users of same group can read each other but not write. Users of different group can't read each other, but his configuration was think for company server. Ubuntu is mostly designed for personal usage.
To secure a laptop, as said mycae, you need to encrypt the disk, else anyone will be able to boot froma LiveCD and copy byte by byte whole disk, including Windows only laptop.