Hello Ben,
Have you already made the change? Every product I looked at from that page had only one size/color/material, etc... What is the purpose of the change? Will the simple products AND the grouped products to which they belong all be indexable on their own URLs?
Grouping products is one way to reduce the amount of product pages on the site by allowing shoppers to choose options from a single product page (e.g. size, color, material...) that would otherwise be listed as its own sku. If your goal is to allow shoppers to view each as its own product then that's fine as long as you're willing to write 100% unique, useful copy/descriptions for each of those pages. If not, it would be better to keep them grouped.
As for the category page, I don't think it matters much what products are being featured there in terms of how the category page will rank. It will affect the pagerank being distributed to product pages though, so rankings could drop for your grouped product pages if you are only linking/showing simple products on category pages.
Without a little more detail about how you group products and what you're trying to accomplish it's hard to provide a great answer.