With group I mean a peleton, a tight group of riders that follow some rules to optimize efficiency. A group achieves a much greater speed than a single rider with the same effort. It does require that all riders are in roughly the same shape. Small differences can be compensated by letting stronger riders spend more time in front, which takes the most strength because they are the only ones who feel the full force of the headwind.
When I ride in a group we ride in two columns. Everybody keeps a distance of about 1/2 wheel diameter to the rider in front to catch as much of the draft as safely possible. When the riders in front get tired, they accelerate a bit, go to the sides (one a bit ahead of the other to avoid having four bicycles side by side), and let the group ride through the gap. (Obviously this works better if there is an even number of people.)
Some groups regulate how long people stay in front, and some use a rotating peleton where the left column is slightly slower than the right. The right rider in front shifts over to the left column after a (very short) time in front and falls back. This makes it hard to talk though.
* The key to riding in this way is keeping the speed absolutely constant. A gap of 30 cm at speeds of 40 km/h does not leave a lot of room for error. This means that
o you watch the rider in front of you while keeping your eyes on the road ahead; never stare at the wheel.
o never, ever brake without announcing it with the agreed-upon hand signs well in advance, it's better to break out of line than to brake in emergencies.
o accelerate and decelerate very slowly if the terrain changes; remember that the group doesn't reach the incline or dip all at the same time.
o don't suddenly stand up because that shifts the bicycle backwards as your center of gravity moves forward.
o it helps to put a hand on your neighbor's shoulder when turning to look back to avoid swerving.
* Similarly, it's important to always ride in a straight line because the front wheel of the rider behind you might overlap your rear wheel. If you make a sudden move to the side, you could kick his bicycle out from under him. If the rider in front of you does this to you and your wheels touch, steer into him hard - the worst that can happen to him is that you displace his wheel, but the alternative is crashing and having the rest of the group run over you.
* If you are in front, use hand signs. Otherwise, immediately duplicate the hand signs of the rider in front of you even if you can't see the obstacle yet. We use the following signs:
o point with your index finger at potholes or other obstacles, even if they seem harmless because they might surprise riders behind you. Remember, they usually can't see much of the road in front of them. Call out "hole", "glass", or "tracks". Railroad tracks are dangerous.
o if you need to shift the paceline because the road narrows or you need to pass bicycles or parked cars, wave your palm behind your back towards the side you want them to go.
o raise your hand if you plan to stop or brake. Never brake without announcing it first.
Remember that when you are in the front position you take responsibility for the entire group. You are their eyes, and you have to think ahead for all of them. For example, don't blast through yellow lights because the last riders will be forced to run a red light.
* Before getting seriously tired in the front position, accelerate, move to the side, and wave the following riders through. Always wait for a wide stretch of the road. Don't do this at a dangerous or difficult place such as a steep incline, dip, or curve. Don't wait until you are completely wasted - you will have to accelerate to catch up when everybody passed you, and the following riders are rested and may want to go faster than you did.
* If you are in the second row and the front row begins to fall back, do not accelerate. Maintain the previous speed until the group has reassembled into two columns.
* Always stay abreast with the rider next to you.
* Don't ride too closely to the edge of the road or parked cars. If you miss an obstacle or a car door opens, there will not be enough time for the entire group to react.
* Choose the rider you will be riding next to - if he is stronger than you he'll give you hell when you are in front; if he is weaker than you he will want to leave the front just as you begin to enjoy yourself.
* Also choose the rider in front of you carefully. If he can't keep his speed constant you'll be on full alert all the time to compensate his speed changes to keep the entire paceline from fluctuating. Also you will need to keep more distance for safety which reduces the advantage of drafting; you'll feel more headwind. It's best to choose the most experienced rider. Riding in the right column is slightly easier, but riding in the left column offers room to escape in emergencies.
* In my experience, if the group splits for any reason when some riders race ahead or others fall back at a difficult section such as cobblestones, always stay with the front group even if it's much harder than staying with the slow group. The reason is that the slow group will have to catch up while the front group takes it easy to allow them to catch up, and when the group is back together there will be those who just got a chance to relax and those who had to catch up, and guess which one is better. Having to catch up for any reason takes more strength than anything else, especially because you usually won't have the benefit of drafting somebody to avoid or reduce the headwind.
* Speaking of cobblestones (we still have a lot of these here in Brandenburg): ride as fast as you can without bottoming out on the rim. Your forearms may go numb, but riding slowly will make for a bumpier ride. If there is any risk of cobblestones, choose a steel bike - our group always gets divided into the steel riders in front and the aluminum riders in the rear. See previous point. This assumes road bikes; fat-tire riders won't have a problem.
When I started riding I was always puzzled how good riders seemed to be completely unaffected by short hills - they just kept riding at the same speed while I was slowing to a crawl. Today I know how it's done: riding longer distances is done with low effort, leaving plenty of reserves for short sprints. Low effort can mean only a few km/h or mph less than usual because wind drag increases so sharply with speed.
Finally, we must address the important question why some cyclists shave their legs (but not their arms or head). This has been vigorously discussed to death on various lists and newsgroups. The conclusion is that there are three reasons:
1. The official one: it significantly reduces air drag by a factor X, where X is very very close to 1.
2. In case of a crash, no hairs will mess up and infect the wound. (The infection will be taken care of by the dirt on the road instead, or by the unshaved arm wound.)
3. Elitism. That guy with the hairy legs is obviously an amateur who cannot be taken seriously. He sticks out like an AOL address on a Linux kernel mailing list.
Personally I think only one of the three explanations holds water.
See also an article on "Packing list" for imports