This may seem obvious to some, but the sync contacts should be checked in the g-mail data and synchronization menu.
Choose my accounts-gmail(account)-check the boxes you want to sync
No - my contact groups are not syncing and it's frustrating.... First name first only option in contacts on my phone and no group syncing from my gmail account? I thought my iPhone was frustrating... the phone service was terrible but at least everything synced easily. Any solutions out there?