ITunes iClould help - syncing and accounts

We have at our house one PC (Windows Vista) and we (family of 5) have always just used one AppleID.  We have two iPhone 4's since June, three iPod Touchs (newest gen), an older nano and shuffle.  That's our current set-up.  We have had our own playlists and settings, etc.  Everything was fine.  Since going to iCloud - iOS5, now our contacts are merged, each of our apps are on everyone else's device and the syncing is continuously making it hard to get back to where we were. 
I starting looking into different users on PC, but my first question is, will iTunes sync with all the different users at once or will it on sync with the user that is logged in? I really don't want to set-up 5 users on my PC, especially for 3 kids.
Second questions.  How do you edit your contact groups once on iCloud? I had a group called "golf" that was synced and now on my wife's phone. I deleted all the contacts in it and on Outlook and it will not go away.  Can one delete it off iCloud?  It seems once something is there it will not remove it. We have edited, synced, turned syncing of contacts on and off and it won't go away.
Can I set-up five different AppleID's on a single computer? If so, can all five share the same music and video library? From what I have read it can only be done through five user accounts. What about if one user buys a song, will it be in the library of all the others? Then Home Sharing only works with one ID from what I see. So if I have five accounts and purchase another computer I have to have five users on the new computer. Please help. I bought Apple for the ease of use and this is getting very complicated.  
We were playing around with Find Friends thinking it would be great skiing this year, but since my wife and I are on the same AppleID we cannot track each other and only one person can use it at time. 
It seems to me Apple is pushing each user in the family to have their own computer and ID. 
Hopefully someone can please help me have peace again in the house (Mom and Dad with iPhones and 3 kids with Touch's one on PC). What is the best set-up to fit our needs?
Thank you,
Ben

I've read that article numerous times, and I'm trying to upgrade because MobileMe is requiring OS4 in order to work starting in about a month. However, the status box in iTunes hangs, saying Backing up iPhone...the little blue line only goes about 1/20 across the bar in about 1.5 hours. Any advice? (I have an up-to-date version of iTunes.)

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