Actually, here's an alternative - it's a little bit of work - not much in my opinion - you can manage groups on the Gmail/Contact page and then just sync - OR - if you have a desktop contact manager, manage groups there, and then make a single .vcf (vCard) file for the whole she-bang. Import that to the web, then delete duplicates on the web, sync your phone - and suddenly all of your contacts are grouped.
And while I still keep everything up that way, especially for work - this company, that company, yadda yadda yadda - I hardly use it anymore in favor of Google Gesture Search, free in the Market.
Use you finger like a crayon, draw the name by as many letters on screen, active search is quick - and I'm dialing in no time from hundreds of contacts.
Can't comment on the app you mention - I'm not familiar with it, and I'm not trying to discourage use of a good app. Just mentioning alternatives while I'm in the neighborhood.
