I was configuring ADFS 2.0 SSO with SharePoint 2010 with integrated SP1 and noticed that after configuring SharePoint Web application people picker did not show ADFS group provided STS. Reason for this is that if you apply SP1 you will lose this feature!!! You need to apply at LEAST June 2011 CU for SharePoint foundation and Server http://technet.microsoft.com/en-us/sharepoint/ff800847.

In my case I applied latest February 2012 CU and voila!!! People picker shows ADFS group.