On my Captivate I have the same no groups issue in the stock android contacts app. But when i installed these three apps (i installed 3 to evaluate them):
Groupy
GangBook
Contact Group Manager
It became apparent that the group data is sync'd from google to my android phone because on first launch of each app the group info appeared with correct contacts in each group as I had set up on google. Each app has its pros and cons.
One biggie for GangBook (in the lead for me in general too) is that when tapping save after using the stock android new contact form to create a new contact, focus is returned to GangBook which pops-up a list of groups with radio buttons so that the new contact can be assigned to a group. The other two do not do this. In fact Groupy didn't even have an obvious way to create a contact. Contact Group Manager would allow me to create a new contact, but i'm not sure where it went and there is no search function in CGM.
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