If you have MMS enabled (even if it doesn't work), then you try to send a text to 1+ people, it will change it to MMS. This is really cool when your talking to multiple iphone users with MMS enabled, because it acts like a chat. It tells them all of the recipients of your original message, and their response messages go to all of them back, so it's like a chat room on AIM or MSN or whatever.
To make it a group SMS instead of an MMS however, the only way i found is to go to settings > messages, and disable MMS, and then send the mass text.