Switch from hook_user_insert to submit handler so the code fires earlier

The project page mentions the automatic account name creation by taking the first part of the email address.
This does not occur however, the account name created is a random set of characters, i.e. onvUp7moby
This random account name appears everywhere in the site, and is very user unfriendly.
I need the account to show the (first part of the0 email address as username.