The answer relates to changes to Time Machine backups in Lion.
My understanding is that when a TM back up is attempted when the back up disk is not connected, a back up is made in /Volumes/MobileBackups.
These back ups do not go away the next time TM runs with the back up disk connected. I am not sure if the OS will eventually reclaim this space.
You can disable the local back ups by running the following command:
sudo tmutil disablelocal
After you run this command /Volumes/MobileBackups is deleted.
I'm sure there is a good reason for the local backups and I don't necessarily recommend disabling them, but they were - in combination with some large deleted folders - the cause of disk space appearing to be still in use.
You can re-enable mobile backups by running:
sudo tmutil enablelocal
More info here - http://arstechnica.com/apple/reviews/2011/07/mac-os-x-10-7.ars/18