Yes, they form a set (I'm assuming the Axiom of Choice here, for cardinality arguments; but you need it to select one representative from each equivalence class anyway, so...). Indeed, you can bound the size of a group in terms of the size of a generating set for the group.
(You can also find the argument in George Bergman's exposition of how to construct the free group on three elements as a subgroup of a big enough direct product in his Invitation to General Algebra and Universal Constructions, Section 3.3, pp 33. Available from his website, page 30 of the PDF there.
I've also given the argument below in slightly less generality, e.g. here )
Lemma. Let $G$ be a group, and let $X\subseteq G$ be a generating set (that is, $\langle X\rangle = G$). Then $|G|\leq |X|\aleph_0$. In particular, if $X$ is countable then $G$ is countable, and if $X$ is uncountable then $|G|=|X|$.
Proof. The elements of $G$ are finite products of elements of $X$ and their inverses. The set of all possible finite products has at most
$$2|X| + (2|X|)^2 + \cdots +(2|X|)^n+\cdots$$
elements, hence at most $|X|\aleph_0$ elements.
If $|X|$ is infinite, then $|X|\aleph_0=|X|$, so $|X|\leq |G|\leq |X|$, giving the equality. $\Box$
Theorem. Let $S$ be a set of cardinality $\kappa$. Then every group of cardinality at most $\kappa$ is isomorphic to a group whose underlying set is a subset of $S$.
Proof. Let $G$ a group of cardinality at most $\kappa$. Then there exists an one-to-one (set) function $f\colon G\to S$. Let $H$ be the group with underlying set $f(G)$ and with operation $f(x)*f(y) = f(xy)$, where $xy$ is the product in $G$. (In other words, use transport of structure. Then $f$ is an isomorphism between $G$ and the group $H$, whose underlying set is a subset of $S$. $\Box$
In particular, if $\kappa$ is a cardinal, then every group $G$ of cardinality at most $\kappa$ is isomorphic to a group whose underlying set is a subset of $\kappa$ itself.
In addition, the collection of all possible group structures on a set $S$ is itself a set, since you can think of them as a subset of the collection of all tuples $(S,f,i,x)$, where $f\colon S\times S\to S$ is a binary operation, $i\colon S\to S$ is a unary operation, and $x\in S$ is a nullary operation (by identifying the multiplication of $S$ with $f$, the inversion map with $i$, and the identity element with $x$).
So, let $\kappa$ be a cardinal. Let $S$ be a set of cardinality $\kappa\aleph_0$. Then every group generated by a set of cardinality at most $\kappa$ is isomorphic to an element from the set
$$\{(X,f,i,x)\mid X\subseteq S, f\colon X^2\to X, i\colon X\to X, x\in X\}.$$
Hence there is a collection of representatives of the isomorphism class which is a set. By the Axiom of Replacement, any collection of representatives of isomorphism classes of groups generated by a set of cardinality at most $\kappa$ forms a set.