Is there a way to create groups of contacts? On my old Nokia phone I was able to create groups of contacts. I found this very useful and had groups such as Co-workers, Neighbors, Doctors, Friends, Family, etc.

Is there a way to do this on my Moto Droid? The only way I've found to group contacts so far is to mark them as Favorites, or create custom folders with direct contact shortcuts on my home screen.
I don't know of any way to do that on the Android device directly.  But you can create groups within your contacts in Gmail, and it will sync down to your device.