Local Models in the ramified case. III. Unitary groups

We continue our study of the reduction of PEL Shimura varieties with parahoric level structure at primes p at which the group that defines the Shimura variety ramifies. We describe "good" $p$-adic integral models of these Shimura varieties and study their 'etale local structure. In this paper we mainly concentrate on the case of unitary groups for a ramified quadratic extension. Some of our results are applications of the theory of twisted affine flag varieties in our previous paper math.AG/0607130.