This is a feature that I want Apple to support, but hasn't yet. The "Group" mechanism in Contacts is a distribution list and only allows you to group contacts but has no editable meta information for you to change (for example, to change the default ringtone).
On an un-hacked iPhone, your only option is to edit individual contacts, and assign the new ringtone for each of them.
I have never hacked my iPhone, so there might be alternative methods available that I am not aware of. I will let someone else with a hacked iPhone answer that part.