Same problem here.  I can only see "My Contacts", "Business" and "Starred in Android".

Same problem, as a workaround I don't use these non-syncing groups but instead added
new "My Friends", "My Family", etc groups and keep my contacts there.  The duplicate
groups is annoying

i have the same problem.

but i think the following info to the development team may help:

the groups ( "Friends", "Family", or "Co-workers" ) was working and showing in the
groups list when i made ( MY FIRST SYNCHRONIZATION ) just after i pursed the phone. 

i then decided to do a factory reset, after that factory reset i add my Google
account again, and now the ("Friends", "Family", or "Co-workers") dose not show any more.

I've tried to reset the phone to factory defaults and adding my gmail account but
still have the same problem.

I have not had the same experience as comment #47. These three contact groups have 
never displayed on my Android phone, including my first synchronization. I purchased my 
phone and initially synced on Oct. 11th. I am using the Sprint Hero with their custom 
contacts application. 

Motorola Cliq - Fresh from factory with no trickery on my part - Not showing coworkers 
google contacts group.  

Running Android 1.5 (with Motoblur)

@yoyo.pete

That is a known issue.

Sprint HTC Hero here, never shows Family, Friends or Co-workers. Had to created 
duplicate groups, VERY frustrating. 

How come this defect has not been resolved in Donut?

I have a HTC Hero on Sprint too and do not see my Friends or Family groups.

Just FYI, Android 2.0 has apparently fixed this issue. I'm on a droid (returned the sprint hero) 
and my contacts sync fine now.

Okay, they sync... but does the contact groups include Friends, Family, etc? That's
the issue...

I'm running Android 2.0 on the Droid and do not have this issue.  I can select to show any of 
the groups setup in my Gmail account.

The three groups mentioned DO show up in Android 2.0.  Please upgrade.  Case closed.

Request backport to 1.5 since I'm unable to upgrade my Samsung Galaxy to 2.0.

This issue is not even close to closed. There is little information available right
now, but it looks like some of the original android phones will not support 2.0 (The
G1 for example.)

For those of us with 'unsupported phones', this is an ongoing issue.

cyanogen is running 2.0 on his g1, he hasn't mentioned having to use the scarySPL so
i think we should be ok for a 2.0 update.

Also have the issue, LG Eve, 1.5. No 2.0 upgrade for us.

I have about 800 contacts in my Droid, bought about 3 weeks ago. It has version 2.0
of the software. It will not display the custom groups that I have created. What it
does display seems to be quite arbitrary. Kernel 2.6.29. Build ESD20. Baseband
C_01.3B.01P.
It will display the All Contacts.

I found some kind of workaround for this issue :
1. Create a fake group such like "Family 2" on your computer
2. Add people to this group
3. Sync your phone, the group will appear on it
4. Rename the group into "Family" on the phone (since the web version will not allow
you to do so)
5. That's it.

Even if the group in the web version appears as "Family 2" , on the phone it will
appear as "Family" and all the contact added to "Family 2" are sync to "Family" on
the phone

Sprint HTC Hero, 
Custom groups sync, but Default Google contacts (Friends, Family, CoWorkers) do not.
I do not want to Create duplicates of these groups, as suggested above, as I'm sure
problems will arise from that as well. 

This is a real let down on Google/Verizon/HTC's part.  I just finally got on the
Android bandwagon only to find something as simple as my Contact Groups not syncing.
 Considering the time that Android has been out and the amount of money folks like
Google/Verizon/HTC are spending...someone on one of their teams couldn't get around
to fixing this?  I love Android but this leaves a bad taste in my mouth after
spending $ on my Droid Eris.

Wife's Eris has same issue. ..system folders won't sync even after factory reset and rebuild.  
My Droid work's perfectly 

android 2.0 syncs my custom groups and system groups - BUT they're not in alphabetic 
order - my 60 custom groups are in a scramble I can't decode - impossible to use 
even if it syncs properly.

The problem of the missing groups (Friends, Family, CoWorkers) happens on an Android 
1.6 HTC Tattoo as well.

Issue happened a few month ago, seems quite difficult for G-team to fix it. Quite 
disappointed on this "must have" application.