I think it's only for contacts in a group isn't it?

 

Correct. Anyone you add to the Favorites group will automatically appear. You can also chose the default action when you select them.

ps. OP; you might want to give people more than 17 minutes to respond to your next post

 

How do I do add people to a favourites group?

 

Go people, then click the second tab along at the bottom of the screen. Then just add a new group