You are adding new Label controls on every single paint event. Don't do this:
// Label temp = new Label();
// temp.Text = userList[i].Text;
// temp.Width = panelUsers.Width;
// temp.Height = 50;
// temp.BorderStyle = BorderStyle.FixedSingle;
// temp.Location = new Point(0, i * 50);
// temp.TextAlign = ContentAlignment.MiddleCenter;
// panelUsers.Controls.Add(temp);
Also, use the e.Graphics object supplied by the argument, not CreateGraphics,