Create a new Address Book entry with the name fields blank, and a company name of ' CATEGORIES.' Be sure to press the Space Bar once before typing CATEGORIES in the Company field -- that way, this entry will always be at the top of your list in the Name column (when in All Contacts view).
Now create a few abbreviations in the Note portion of the CATEGORIES entry. In my scheme, I use the prefix cat (for "category"). A shout-out to TextExpander for improving my memorable abbreviation skills!
Some examples:
- catchurch = church members
- catmag = all magazine subscriptions
- catNC = a group of friends in North Carolina
- catMac = all Mac or computer-related businesses
- catrestaurant = all restaurants
- cathotel = all hotels
This lets me use Address Book effectively without creating a ton of Groups -- and a cleaner Groups list works better for me on my Mac, and definitely better with my Address Book fully synched to my iPhone.

