Group blogs are a new feature in vb Blog 2.0 - read more about that
here
Unfortunately creating a group does not create a group blog. Currently you can manually create a user with the same name as the group, but then you have to log in as that user to send invites for users to join.
With an integrated group/blog system people that join groups could automatically be added to the group blog (this functionality is very similar to how community server works)