You have to create contacts.cfg where you will define all emails and all sms' separately. Then you define contactgroups.cfg where you will define groups of defined contacts from contacts.cfg. Those contact_groups you can then put for contact personel in host and service definitions.
Don't define contacts in nagios.cfg. In that file you just point where your configuration files are.
For second question you can define notification interval in host/service definitions.
As for servicegroups, when you define the groups you put the members in this order respectively.
service1,service description1,service2,service description2,etc...
Everything I've just explainde is very well described in nagios documentation, which you have to read if you want everything to work properly: