New in v4.1.0 is a totally redesigned user note system. In the administration when you are viewing a listing or a user it has a link at the bottom to add user notes. You click the paperclip icon to add them.
Once you start adding a note you have a few options.
Note Text - This is the actual note text
Flagged - If you flag a note as important it appears at the top of the page when viewing the user or listing page.
Type - The two options here are public and private. Public is shown on the userindex page when a site user logs in. Private is only accessible from the administration.
Here is a link to a blog post displaying a video of how to use the
User Notes system.