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Most users of the iPhone are unaware on how to create or remove contact groups on their favourite mobile device. The easiest way to do this is to use the Address Book application on the Mac or PC to edit and change contact information and groups. Groups and contact names may be added by clicking the + button at the bottom of each section in the Address Book application. To remove a group or name, select the entry by clicking it so it becomes highlighted a blue colour, then hit the Delete key on your keyboard. If deleting a contact you will be presented with a dialog asking if you wish to delete the contact, or only delete it from the group. If you choose the Delete from Group option, the contact will still appear in the All contacts list, the other button named Delete will permanently remove a contact. Deletion of a contact group uses the same delete key method after the group name is selected.
When finished editing your contact information in the Address Book, attach your iPhone to the computer, open iTunes, select the phone in the Devices section, then click the Info tab at top. Ensure the Sync Address Book Contacts option is ticked, then click the Apply button at bottom right to make the changes on the iPhone. A contact may also be removed from a group by deleting the contact on the iPhone itself as shown above.