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0e1f616
(Get the code!)
Nope, it DOES NOT follow symlinks.
For example, i have a symlink for my Pidgin logs to sync it with my other computers, the only way i can make it is to place a symlink from pidgin settings directory to ~/Ubuntu One/My Files.
When i use Dropbox, it syncs all files, treating symlinks as directories, which is very convenient in my case.
On the other hand, some people may want symlinked directories to be treated as symlinks, but not as directory. So maybe an option for that would be a good idea.