I just got an iPhone 5 and synced it with my iCloud account. I have groups in my address book and some of them have been replicated in my iPhone 5 twice or thrice. I have an iPad which I also sync with iCloud, and I don't have a problem with the groups in my address book in the iPad. So, I'm wondering why this happened on the iPhone.
iPhone will duplicate if you import contacts from your SIM card or namually add new contacts and save in iPhone memory instead of save in iCloud. So you have contacts from iCloud and from iPhone memory too.
Try to save your contacts just one place, like iCloud.