Hi,
Peer group is important throughout the preparation.It helps you to ensure you are on the right track in terms of covering the syllabus. I did not take any coaching for prelims and failed two prelims and I realized that my friends who cleared prelims had covered the syllabus in greater breadth and depth than me.
I also could practice questions together. We would decide 3-4 sub topics (in say modern history) and then try to solve questions together. UPSC is afterall a competitive exam. Therefore if your peer is better prepared than you, it gives you a reality check on your own preparation.
It also keeps the competitive spirit alive. Peer group played an important role in my mains preparation for daily answer writing. I preferred that over joining a test series.
Be sensitive and careful when entering a peer group. Your peers should be positive about the exam, better than you (if possible) in terms of preparation, friendly and serious aspirants. This would really help you. It helped me! Otherwise, a bad peer group could bring you down ss well.
All the best.