Here are the steps to implementing quotas on a RedHat based system :

We will enable quotas on /home on the /dev/hda3 partition.
Create user :
useradd user1
passwd user1

Edit /etc/fstab :
From :
/dev/hda3 /home ext3 defaults 1 2
To :
/dev/hda3 /home ext3 defaults,usrquota,grpquota 1 2

Remount the disk (make sure it’s not in use) :
mount -o remount /home

Check if usrquota and grpquota are enabled :
mount | grep /home

Create quota files :
quotacheck -cvug /home
This creates /home/aquota.user and /home/aquota.group

Check quota :
quotacheck -avug
Enable quota for user1 :
edquota user1
Edit soft and hard limits (1000 = 1 MB) or inode values.

Check the quota for user1 :
quota user1

Enable quota :
quotaon -avug

In addition :

Through a cron, run everynight when the filesystem is not used :
quotaoff -avug && quotacheck -avug && quotaon –avug

Get quota stats :
repquota -a

Warn users when their quota has been reached :
warnquota

For some reason I had to manually edit /etc/quottab for warnquota to work