Yes, you will have to create all of the accounts on the mail server. They can be pop only users, meaning that they can not actually log into the box.
Personal suggestion: Take a look at www.squirrelmail.org. It is a fast little imap interface that takes all of 30 seconds to setup. While Imp worked well for me, it was a bear to get setup, and if I had other phplib based applications, forget it. Imp wanted to be the only one.
