To activate the autobuddy function for the Jabber server first get the actual settings:
sudo serveradmin settings jabber
jabber:enableAutoBuddy = no
Notice that it's off, so now go ahead and set it to yes:
sudo serveradmin settings jabber:enableAutoBuddy = yes
After which you'll have to restart the Jabber server. Now comes the secret sauce, you have to manually run the process to update the buddy list for all users.
sudo /usr/bin/jabber_autobuddy -m
Note that this has to be done every time you add a new user to the Jabber server. Also, users that are currently logged in will have to log out and back in again for the new users in the buddy list to show up.