Can you then use these new groups to send group emails? I coach 2 different soccer teams, if I could use a group to send an email to my entire team, it would be worthwhile setting up. I did a test run using your walkthrough above (thanks BTW) and it just looks like a more "restricted" contact list...
You can via the iCloud website. When you initiate an email to compose, simply type in the name of the Group in the "To" field. The names in the group will appear after you hit the enter / return key. I don't know how to do it from the iPhone, if there is a way to do it.