Steps to reproduce:

• Turn off 'User Searching By Full Name' in JIRA General Configuration
• Administer a project's project roles
• click into the user search field and start typing a user's name

This results in

Begin typing to find users.
The value sysadmin is invalid.

Searching on the group side of things works perfectly.

Nice to haves:

• Better documentation around this option, there's nothing that says you need this feature enabled so that you can edit project roles (searching for users, etc).
• While it's disabled, valid usernames fail, so either having an old user picker would be an option or a note saying, "Turn on 'User Searching By Full Name' to enable this feature."