Empathy should allow the user to Hide or Show groups from the View menu.

This enhancement would make it simple to:
-Show: the groups as it already does, making it easy to separate your contacts.
-Hide: the groups so that there are no group labels in the Contact list and they are all treated as if they are in the same group and sorted appropriately.

The ability to hide contact lists makes the contact list much more clutter free and simplified when you're using multiple services.

Adium supports this feature if you're looking for an already implemented example. It may be implemented already by other messengers on various platforms as well.