Besides the obvious issue of you having too much information to load onto the SSD, I've done this basic procedure in the past. However, it's much easier now using Time Machine, but you have a few options:
If you don't currently have a backup that can hold all your data, do yourself a favor and pick up a drive that can. Time Machine should be built into the OS you're currently running.
Do the backup. For 400 GB, you probably want to set it up before you go to sleep and let it run overnight. Once it's complete, unmount the drive and unplug it from the computer. Go through with the drive install and then install Lion. When the computer reboots, before you start to work with the setup assistant, plug in the new drive. At some point it will prompt you for a location from which to migrate data. Select your backup. Let it run for a while and when you get back, it will contain all the data you backed up, in a usable form. This is my current favorite method for cloning user workstations.
If you can't get an external backup, you can use SuperDuper to create a full-system backup from the active system disk. You'll have the ability to trim the data to the size of the disk to which you're copying in the interface. This route is a little more technical and requires a bit more time hands-on.
I wouldn't recommend copying a user folder for a logged-in user due to open preferences files. You'll get all kinds of "File In Use" errors and it will probably exit the copy prematurely. Instead (if you're dead-set on using this method - which I advise against) create a second admin user and copy the folder over into a temporary location before staging it into the actual
/Users/ location. You'll also need to make sure the permissions for the entire folder are set so that the user whose home you are copying can actually access and write to their files. To do this, you can use the Finder's
Get Info on the folder and then add the user to have full permissions. Once it's staged into the
/Users/ folder, you can log back in to the main user and delete the secondary admin. You may have permissions issues in the future using this method.
All that said, it's totally worth it to get an external to back up to for Time Machine to clone your new SSD from.