In iOS Contacts prior to version 6, one could define Groups and then drill down to them individually. iOS 6.0 changes the UI and allows one to view merged Groups. Here’s how it works in iOS 6.
Prior to iOS 6.0, the list of Groups had an arrow on the right side suggesting that if you touch the Group, you’d see the contents of the Group. It's very intuitive.
The list in the Group is shown according to your Settings.
Settings -> Mail, Contacts, Calendars
In iOS 6.0, the method has changed. Instead of the “>” symbol, you’ll see checkmarks. The meaning of the checkmarks is that they are a selector for those Groups that will be merged and displayed when the blue Done button on the upper right is touched.
For example, if you see, at first, every Group with a checkmark, touch All Contacts to clear the checkmarks. Next, touch only the Group(s) that you want to display. You can select multiple Groups. Then tap Done. The Groups that you selected with checkmarks will be merged and listed according to your Settings, same as before.
The nice thing about this technique is that the selected Groups can be merged. However, the downsides are that it's counterintuitive at first, and it’s more work to go back and forth between Groups.