This is what we created the "Affinity Tool" for. Essentially you rank your friends as to how important they are and use the slider control at the top of your network stream page to zoom in to your close friends or zoom out to the noise makers. You have to expend the effort to rank your friends (by default they are all ranked at "80" on a "99" scale) but after doing this it's very convenient to use the zoom control.
Changing permissions also works but you won't ever see their posts.
"Ignore" is a flag which does basically the same thing as removing permission. It takes away all permission to import their posts (and also their ability to comment on your posts and send you private mail).
Privacy groups let you organise your friends into named clusters (work friends, family, internet friends, boyfriends/girlfriends, whatever) and view different clusters. Be aware that when viewing a cluster and you post something, by default it only goes to that cluster.