Categories vs. Distribution Lists
I belong to a local filmmakers' collaborative, in which film hobbyists take turns to make their film projects, with the help of others in the group. After every project, we reconfigure the teams, and switch roles on the next project. So the current film's director would work as cinematographer in the next, as Asst. Director on the following, and so on.
So, to organize the members' contact information in Outlook, I've used two strategies:
1. Categories: Add "project" categories as the contacts move to new projects. Outlook supports multiple categories, but I'm not sure if there's a max. I did run into a problem with syncing multiple categories with my Pocket PC at one point, but that seems to have fixed itself since ActiveSync 3.8.
2. Distribution Lists: Supported in outlook for exactly this purpose, to group your contacts in different ways. Problem: distribution lists don't sync with Pocket PC.
If you don't need to sync contacts with your PDA, I'd recommend distribution lists, they are a little easier to work with (for example, you can address an e-mail to the distribution list directly, by typing in the name of the list in the "To:" field).