Test groups are great for grouping test items that depend on each other for them to work. However if one of the test items in the group fails the entire group should fail and the test should move on ...
I agree that this would need to be configurable just like you have the ability the say if a test item fails stop the project or just stop the test item. groups should have the ability on failure to stop the project or stop the group.
In my cast I have 10 groups each group represents a test "scenario", inside of each group is around 20-25 test items, These test items can have over 100 steps. If I were to combine all the test items into 1, analyzing the log would be a nightmare for our QA people.
The current way I get around this issue is to make each scenario a project, then run the suite. This works ok except that make reusing some of the code harder.