One of the distinctive features of Google +, a new social networking from the Google named Circles. With this feature, anyone can set their own friends in the network in their respective circles. As the name suggests, the grouping is displayed in a circle. When first using Google provides a choice of four circles, each of Friends for friends, Family to Family, Acquaintances to acquaintances, and Following to the attention.
The main problem with Google Circles is that it's tedious. While I agree that most people separate their contacts into various groups in real life, doing so in a social network is a chore. It's one of the reasons we have different social networks (LinkedIn for work, Facebook for friends, etc.). Asking people to do this kind of organizing proactively, on a single network, vastly overestimates the patience of Web users. Sure, some people are very organized and left-brained (like the engineers who created Google+), with spotless inboxes and well-maintained lists of contacts, but my feeling is that the vast majority aren't. And of all the things that have turned people off of Facebook over the years, the lack of focus on friend-organizing tools isn't one of them.