You can use the rpm just fine, but you have to "read between the lines" when you are reading the nagios2.0 documentation, since your directory structure will be different.
The error you are getting, tells you exactly what is wrong.
Define a contact group for the host server3.
Your hostgroups.cfg file contents?
alias Bus Switches
If you don't have server3 in a group, then that is what is wrong.